Modeling Household Income and Consumption Expenditure Multipliers for Uzbekistan Based on SAM

Abstract

The empirical analysis of current development process impact on welfare and distribution of income and consumption among individuals has been at the centre of economic research over the last three to four decades, since this type of research has largely come to address important issues of inequality and poverty measurement. Post-2015 Development Goals agenda has placed greater focus of economic policy to such the priority areas as sustainable economic development, poverty reduction and employment growth based on activation of new sources related to the increase in the quality of human capital. In this regard, special attention is required to study the effectiveness of mechanisms to promote sustainable growth of welfare and improvement of living standards in Uzbekistan. This article discusses the multiplicative effects of economic shocks on incomes and consumption of household quintiles using data from the SNA accounts on distribution and use of income. Particularly, it analyses the path of quality of life of society and possibility to achieve a significant goal to improve the competitiveness and efficiency of the national economy applying SAM model in order to measure population differentiation in terms of spending on food and non-food consumer goods and services. Results show, that despite the fact that the impact multiplier of food production is the largest for the first quintile (relatively to multiples of non-food industries and services), its impact is small enough to be a tool for poverty reduction in Uzbekistan. Moreover, only the stimulation of production of goods and services may not have a significant impact on the reduction of inequality in income distribution. The preferred tool to protect vulnerable sectors of the population and reduce poverty is targeted support, which forms the basis for the economic policy of Uzbekistan on the way to sustainable and shared growth.