Real Household Consumption Research Articles

Collateral damage? Welfare effects of the Ukraine war on Pakistan

The 2022 Ukraine conflict has contributed to a major spike in international commodity prices. In this study, we conduct a top-down, macro-micro simulation analysis by combining Computable General Equilibrium simulations with data from the 2018–19 Pakistan Household Integrated Economic Survey to analyze the impact of global price shock to four major commodities, namely wheat, vegetable oil, petroleum, and fertilizers. We come up with evidence for a significant, non-negligible negative impact of the price shock, both at the aggregate and the household level: Real GDP shrinks and real household consumption and income decrease. The drop in consumption and income is more visible among farm households, with the two falling by 5% and 3.48% respectively. The consumption and income of the above-median income households fall more steeply, and income inequality decreases. The USD3.2 headcount poverty rate at the 2018 purchasing power parity increases by 1.15%. Urban households show the worst decline in food security, both in incidence and intensity. The role of petrol prices in driving poverty among rural farm households and that of food stuff (wheat and vegetable oil prices) in aggravating urban food security is particularly evident. These findings highlight the poverty and food security-worsening dimension of the Russo-Ukrainian conflict.

Nowcasting Russia’s key macroeconomic variables using machine learning

The article developed a methodology for nowcasting and short-term forecasting key Russian macroeconomic aggregates: real GDP, consumption, investment, export, import, using machine learning methods: boosting, elastic net, and random forest. The set of predictors included indicators of the stock market, money market, surveys, world prices for resources, price indices, and other statistical indicators of different frequency, from daily to quarterly. Our approach makes available a detailed examination of the changes in forecasts with the flow of new information. For most of the considered variables, a monotonic non-deterioration of the forecast quality was obtained with an expansion of available information. Furthermore, machine learning methods have shown significant superiority in predictive performance over naive prediction. The considered methods within the framework of the pseudo-experiment quickly showed a strong drop in real GDP, household consumption, and other variables in the context of the spread of the COVID-19 pandemic in the 2nd and 3rd quarters of 2020.

THE INCREASE IN FUEL PRICES AND THE PROBLEMS FOR THE ECONOMY

This study aims to analyze the impact of the increase in fuel prices on the Indonesian economy. This study used qualitative methods to analyze the problem of increasing fuel prices in Indonesia and its impact on the economy. Data were collected through observation, interviews, and documentation. Interviews were conducted with the public and business actors affected by rising fuel prices in Indonesia. Data were analyzed using interactive analysis including data reduction, data presentation, and drawing conclusions. The results showed that the increase in fuel prices in Indonesia has a negative impact on the economy. This can be seen from the increase in the number of unemployment, the increase in the price of basic needs, the increase in the cost of producing goods and services (in and out of town transportation services), the increase in inflation, decreasing real salary and household consumption, and encouraging requests for compensation policies such as Direct Cash Assistance and Wage Subsidy Assistance as a form of compensation for rising fuel prices.

The real exchange rate and household consumption heterogeneity: Testing Kocherlakota and Pistaferri’s (2007) model

Does household heterogeneity matter for exchange rate determination? This paper tests Kocherlakota and Pistaferri’s (2007) prominent heterogeneous agent model, in which the real exchange rate perfectly tracks relative domestic/foreign moments of cross-household consumption distributions. The evidence presented here indicates that the real exchange rate is disconnected from relative cross-household consumption moments.

Effectiveness of energy efficiency improvements in the context of energy subsidy policies

Malaysia, as one of the top energy subsidizing countries, has announced to remove energy subsidies necessarily, not only to reduce energy consumption and the government budget deficit but also to improve overall efficiency and air quality. Therefore, this study evaluates the impacts of rationalizing energy subsidy and its energy efficiency improvement during 2010–2030 using a dynamic recursive computable general equilibrium model. Results revealed that reducing energy subsidies decreases energy consumption and emissions of all air pollutants. While the economic performance of the country improves in the long run due to stimulation in capital demand and investment, it reduces in the short run. Energy efficiency also improves by 1.1% and 2.3%, in the short run, in response to a reduction of 10% and 100% in energy subsidies, respectively. Energy efficiency improvements decrease the negative effects of pure subsidy policies on real GDP, trade, investment, and household consumption. The efficiency improvement policies also are effective in reducing more level of the rebound effect and lead to more energy saving in the economy, particularly in the petroleum products sector. The impacts on the rebound effect also differ across economic sectors. The results of this study provide new insights for energy subsidy policy and energy efficiency and suggest that additional tools and policies are required for improving the energy efficiency caused by phasing out energy subsidies. Malaysia, as one of the top energy subsidized countries, attempts to reduce the level of energy subsidies over time and, consequently, decline the use of fossil fuels in the economy. Therefore, this study analyzes the impacts of different subsidy reform policy on energy efficiency and, consequently, on economic and environmental performance and rebound effect of Malaysia by a recursive dynamic computable general equilibrium model.

Влияние шоков мировой деловой активности, предложения нефти и спекулятивных нефтяных шоков на экономику РФ

In this work we build a Bayesian vector autoregression model to estimate the impact of global economic activity shocks, supply shocks in the global oil market, as well as speculative oil shocks on key macroeconomic variables of the Russian economy: GDP, household consumption, fixed capital investment, import, export, real effective exchange rate, real wages and income, MIACR interest rate and GDP deflator. The model uses real oil prices, the index of global economic activity, oil production and oil inventories as exogenous variables. The model parameters are estimated for the period from Q1 1999 to Q4 2019. The dynamics of four exogenous variables is described using a separate external vector autoregression model, which is estimated over an extended time period from Q1 1974 to Q4 2019 in order to more accurately estimateits parameters and identify shocks. Shocks are identified based on the approach proposed in [Kilian, Murphy, 2014], which uses sign restrictions and restrictions on the price elasticities of oil demand and oil supply. According to estimates of impulse responses, such variables as real household consumption, imports, and the exchange rate respond positively and statistically significantly to all three shocks leading to an increase in oil prices. However, a shock to global economic activity has a stronger impact. With an increase in oil prices for real GDP, investment and exports a stable and statistically significant positive impact is observed only when this price increase is due to a shock to global economic activity. The work also estimates a forecast error variance decomposition and a historical decomposition of the domestic variables by shocks, which indicate the prevailing role of shocks in global economics activity in the dynamics of Russian macroeconomic variables.

Dynamics of Growth, Unemployment, and Poverty in Ethiopia: Evidence From Time Sires Analysis (ARDL Approach)

The study was examined the dynamics of economic growth, unemployment, and poverty in Ethiopia by using annual time series data from 1980 to 2018. The Auto-Regressive Distribution Lag (ARDL) bounds test approach is applied to determine the existence of the long-run linkage among study variables. The result indicates the existence of a long-run causal relationship among economic growth, unemployment, poverty and investment (gross fixed capital as an intermittent variable) in Ethiopia. Hence, the error correction term is adjusted annually by 0.522% towards the long-run equilibrium. Besides, all the estimated coefficients of all variables have satisfied the hypothesized signs of trickle-down economic growth path preposition at a 1% statistical significance level. Furthermore, the Granger causality test result confirmed that there is a unidirectional causality running from economic growth to poverty, unemployment to economic growth, and investment to economic growth. There is bidirectional causality exists between running from investment to poverty and poverty to investment. But, there is no Granger causality between poverty (real household consumption expenditure per capita) and unemployment in Ethiopia. Thus, the study concludes that Ethiopian economic growth was following a trickle-down growth path that targeting the poorer people to trap in poverty. Finally, the study recommends to the policymakers and government to insightful more ways on economic growth trickle down to solve salient traits i.e. unemployment and poverty in the Ethiopian economy.

Multivariate unobserved component model for an oil-exporting economy: the case of Russia

ABSTRACT This paper presents an unobserved component model for real GDP, real household consumption, and real investment of an oil-exporting economy. The model decomposes domestic variables’ dynamics into permanent and transitory components, accounting for dependence on oil prices in the short and long-run, as well as for the common long-run economic growth and the common cyclical behaviour. Estimated on the Russian macroeconomic variables, the model exhibits a strong dependence on oil prices.

Measuring the Impact of Free Goods on Real Household Consumption

We suggest a methodology that allows statistical agencies to form approximations to the benefits that flow to households from new free goods. The present production-oriented GDP measures are not satisfactory for measuring real household consumption and will be increasingly inaccurate as free goods, such as those made possible by the digital revolution, become more important. Advertising expenditures are not an adequate substitute for measuring the benefits of new goods to the household sector. Instead, we need to draw on estimates such as those provided by choice experiments.

Purchase Power and Consumption Pattern Change of Society (Analysis of 34 Panel Data in Indonesia)

Purchase power and consumption patterns change are important aspects to formulate government policies in economic development. The research objective is to analyze each the magnitude of macroeconomic variables on real household consumption of 34 provinces in Indonesia. The research method used is correlative quantitative research to explore the relationship of facts proposed and then described systematically, factually and accurately about the facts and phenomena, as well as the variables needed for public consumption. The research results show two finding. First, there is a negative and significant relationship between conversion and consumption of Indonesian. The increase in inflation will be responded by a decrease in consumption of Indonesian in 34 provinces during 2016-2018. Second, Per capita income has a negative and significant impact on consumption of Indonesian in 2016-2018. The research recommendation is to promote Indonesian consumption who moves into slowing phase due to a shifting or consumption patterns change. Keywords : Purchase Power, Consumption Pattern DOI : 10.7176/JESD/11-2-07 Publication date: January 31 st 2020

IMPACT OF MACROECONOMIC VARIABLES ON ECONOMIC GROWTH: BANGLADESH PERSPECTIVE

The impact of macroeconomic variables on the economic growth of Bangladesh is investigated in this study by considering GDP growth (GDP) as the representative of economic growth. In addition, inflation (INF), real interest rate (INT), exchange rate (EXR), and household consumption expenditures growth (HCE) are selected to represent the macroeconomic variables for the period of 1987-2015. Correlation and multiple regression analysis are conducted to evaluate the data. In correlation analysis, it is found that GDP has positive correlation with all the variables except INT. In regression analysis, GDP is selected as the dependent variable and INF, INT, EXR, and HCE are considered as the independent variables. It is observed that the independent variables explained 75.60% of the variability of GDP and the relationship is also found statistically significant at 95% confidence level. Therefore, this study has concluded that macroeconomic variables have significant effect on the economic growth of Bangladesh.

Poverty and inequality impact of a natural disaster: Myanmar’s 2008 cyclone Nargis

Abstract According to national household survey data for Myanmar, spanning the five-year interval 2005–2010, average real household consumption expenditures remained stagnant, but measured poverty incidence and inequality both declined significantly. The distribution of the economic pie shifted in favor of the poor while the overall size of the pie barely changed. This paper examines the possibility that the hitherto unexplained reduction in measured inequality was caused, at least partly, by a natural disaster, Tropical Cyclone Nargis, which devastated parts of Myanmar in May 2008. This hypothesis is supported by a recent historical study which argues that, globally, large reductions in inequality normally occur only through either man-made or natural disasters. The paper develops a method, based on regression analysis of household level data, for isolating the impact of an exogenous natural event like a cyclone. The estimated regression model is used to simulate a counterfactual distribution of expenditures in which, hypothetically, the cyclone did not occur. The estimated impact of the cyclone is the difference between the observed outcome, in which the cyclone happened, and this simulated, counterfactual outcome in which it did not. The findings indicate that the cyclone reduced inequality between regions of Myanmar, because the negatively affected regions were on average better-off than the unaffected regions, both before and after the cyclone. Within the affected regions the negative impact of the cyclone was largest in absolute terms among richer households, but as a proportion of household expenditures, these negative effects were larger among the poorer households. The cyclone therefore increased economic inequality within the affected regions. Overall measured inequality declined because the between-region reduction exceeded the within-region increase.

A recursive dynamic computable general equilibrium analysis of value-added tax policy options for Nigeria

The study investigates how government can implement an increase in the rate of value-added tax (VAT) to ensure that the final rate of 15% is achieved in a way that satisfies the public (households and business community) and also ensures maximum revenue generation for the government. The nation’s VAT rate is presently at 5%. A recursive dynamic CGE model is used to address the study’s objective, and the model is solved and simulated for 10 years. It is found that the best policy option is to increase the rate by 2.5% yearly for the next 4 years. The option delivers the best outcomes for real GDP (and its growth), investment, intermediate imports, government expenditure and household consumption when compared to alternative options that require 5% increase (implemented in the first and fourth years) and 10% increment (implemented in the first year). Government revenue (divided into VAT, tax and total revenue) registers the highest percentage changes under 2.5% VAT policy in the medium term (6–10 years).

Impact of an emissions trading scheme on Australian households: A computable general equilibrium analysis

Following the international commitment to tackle climate change issues, many countries have introduced climate change policies to reduce emission levels. Australia also expects to follow the international pathways to implement a climate change policy to curb its greenhouse gas emissions. In this context, the former Labor Government in Australia intended to switch its carbon tax policy to an emissions trading scheme (ETS) after 2 years of its initial operation to achieve an emission target of 5 per cent below the 2000 level by 2020. By employing a computable general equilibrium model and a social accounting matrix database, this article analyses the potential impacts of an ETS with various revenue recycling options on Australian households. Results show that an emission permit price of A$20 per tonne of CO2-e would help Australia to achieve the 2020 emission reduction target. This permit price is likely to have a small contraction in Australia’s real GDP (i.e. about 0.3 per cent) and in real household consumption (i.e. about 0.19 per cent). The price of electricity is projected to increase by 13 per cent. The revenue recycling options seem to create an improvement in the macro-economy and there is a trade-off between economic efficiency and equity in the Australian economy with compensations. The personal income tax reduction policy results in an economic efficiency with a positive change in real aggregate household consumption whereas providing an equal lump-sum transfer brings benefits equally for all household groups. Increased government transfers based on recipients’ current pension and allowance rates generate more welfare gains for middle-income household groups.

А Quantitative Assessment of the Impact of Credit on Economic Growth in Russia

The Russian credit market reflects the significant range of problems faced by the national economy. Among them are structural and regional imbalances; restrictions that prevent the free movement of funds in the interbank market; uncertainty that leads to a slowdown in the rates of attraction and placement of credit resources. As a result, the question arises as to how effective the credit market in Russia is and whether it has a stimulating effect on the national economy. The purpose of this article is to assess the impact of credit on economic growth as one of the criteria for the effectiveness of the credit market in the national economy. Growth rates of real quarterly GDP levels cleared of seasonality as well as quarterly growth rates of real household consumption in Russia cleared of seasonality are viewed as indicators of economic growth. Indicators of the credit market include quarterly growth rates of real loans to households and quarterly growth rates of real loans to non-financial organizations. In addition, such events as the global economic crisis of 2008 – 2009 and its impact, Western sanctions and the increase of crude oil prices were taken into account. As a result of the study conducted by the authors using an open econometric model of vector autoregression, the conclusion was drawn that loans to households and non-financial organizations in the long term have a stimulating effect on the Russian economy.

Economic Model Predictive and Feedback Control of a Smart Grid Prosumer Node

This paper presents a two-level control scheme for the energy management of an electricity prosumer node equipped with controllable loads, local generation, and storage devices. The main control objective is to optimize the prosumer’s energy bill by means of intelligent load shifting and storage control. A generalized tariff model including both volumetric and capacity components is considered, and user preferences as well as all technical constraints are respected. Simulations based on real household consumption data acquired with a sampling period of 1 s are discussed. The proposed control scheme bestows the prosumer node with the flexibility needed to support smart grid use cases such as bill optimization (i.e., local energy trading), control of the profile at the point of connection with the grid, demand response, and reaction to main supply faults (e.g., islanding operation), etc.

On the use of probabilistic forecasts in scheduling of renewable energy sources coupled to storages

Electric energy generation from renewable energy sources is generally non-dispatchable due to its intrinsic volatility. Therefore, its integration into electricity markets and in power system operation is often based on volatility-compensating energy storage systems. Scheduling and control of this kind of coupled systems is usually based on hierarchical control and optimization. On the upper level, one solves an optimization problem to compute a dispatch schedule and a coherent allocation of energy reserves. On the lower level, one performs online adjustments of the dispatch schedule using, for example, model predictive control. In the present paper, we propose a formulation of the upper level optimization based on data-driven probabilistic forecasts of the power and energy output of the uncontrollable loads and generators dependent on renewable energy sources. Specifically, relying on probabilistic forecasts of both power and energy profiles of the uncertain demand/generation, we propose a novel framework to ensure the online feasibility of the dispatch schedule with a given security level. The efficacy of the proposed scheme is illustrated by simulations based on real household production and consumption data.

Do inward looking trade policies affect poverty and income inequality? Evidence from Indonesia's recent wave of rising protectionism

Unlike previous studies which often focus on trade liberalisation, this paper examines the impact of protectionism in the form of import tariffs and mineral export taxes on rural and urban poverty and income inequality for the first time. Using a dynamic computable general equilibrium model on Indonesia, mineral export taxes were found to adversely affect urban and rural poverty but income inequality hardly changed as the decline in income in the higher income group is not significantly different to the decline in low income groups. However, if smelters for mineral ore are developed, then there is not only a fall in poverty, more so for the rural than urban, but there is some decline in income inequality. On the other hand, although the current imposed import tariffs do not affect poverty or income inequality, any further increases from the current low average MFN applied rates, will see a rise in rural and urban poverty and income inequality. By and large, any small improvements in the trade balance brought upon by the mineral tax and import tariffs are more than outweighed by the substantial decline in real household consumption expenditure due to falls in employment and wages, thereby leading to a fall in GDP growth.

WAEMU Trade and Current Account Balance Deficit Analysis: A Panel VAR Approach

Our study focuses on the analysis of the main determinants which have an effect on trade and current account balance. We empirically investigate the effect of money supply (M2), real exchange rate, income, inflation, investment, and house-hold consumption expenditure on the trade and current account balance of WAEMU for the period 1980-2013. The examination of monetary and absorption approaches to the balance of payments motivate the inclusion of income and money supply (M2). The conventional approach of elasticity motivates usage of exchange rates. We adopt the panel VAR method which additionally includes a simulation of variance decompositions and impulse response functions for transmission of shocks and further deductions. The study found a negative and statistically significant effect of money supply, household consumption expenditure on trade Balance. We found also a significant and positive effect of real exchange rate, income, inflation, and investment on the trade balance. A significant and negative relationship between money supply, investment and current account balance was established. The effect of real exchange rate, income, inflation, and household consumption expenditure on the current account balance was found to be positive and significant as well. The significance of exchange rate effect on the trade balance suggests that the Marshall-Lerner condition hold for WAEMU.

Carga financiera del cuidado del enfermo crónico en un grupo de familias en Guatemala

Como objetivo del trabajo se planteó describir la carga financiera del cuidado del enfermo crónico en un grupo de familias en Guatemala, para ello se realizó un estudio descriptivo, de corte transversal que se desarrolló en 2014 como parte de un estudio multicéntrico. Se emplearon para la recolección de datos dos encuestas: para caracterizar al grupo familiar la encuesta “GCPC-UN- D y para conocer el consumo real efectivo de las familias la encuesta “Costo financiero del cuidado de la Enfermedad crónica” de Montoya et al. Para analizar la carga financiera se empleó la Metodología CARACOLA. Los resultados revelaron que los costos propios de salud, seguidos por los de transporte, vivienda, comunicaciones y alimentos son los que en conjunto y en ese orden producen carga financiera familiar del cuidado del enfermo crónico. Se concluye que el consumo real efectivo de un grupo de familias en Guatemala asociado con el cuidado de un enfermo crónico, genera carga financiera elevada produciendo un impacto importante en la estabilidad familiar y dificulta aún más la experiencia de salud. Es clara la necesidad de incluir en las políticas públicas la forma de considerar y mitigar los costos del cuidado