The effect of the crisis on consumption György Molnár and Zsuzsa Kapitány Institute of Economics Economics of Crisis, Education and Labour SEBA – IE CASS.

The effect of the crisis on consumption

György Molnár and Zsuzsa Kapitány Institute of Economics

Economics of Crisis, Education and LabourSEBA – IE CASS – IEHAS, Chinese - Hungarian International Conference

30th June -1st July 2011, Budapest

Source: HCSO: National Accounts http://portal.ksh.hu/pls/ksh/docs/hun/xstadat/xstadat_eves/i_qpt007.html Consumption: http://portal.ksh.hu/pls/ksh/docs/hun/xstadat/xstadat_eves/i_zhc004.html

Real net income and consumption of households, on the basis of the national accounts

2000=100

Net quarterly change of bank loan volumes of households, adjusted for exchange rate changes, seasonally adjusted

Source: MNB (The Central Bank of Hungary): http://www.mnb.hu/Kiadvanyok/mnbhu_stabil/mnbhu_stab_jel_201004

Share of defaulted retail loans (%)

Source: PSZÁF (Hungarian Financial Supervisory Authority): The HFSA’s Second Risk Report in 2010,http://www.pszaf.hu/data/cms2217968/riskreport_2010H1.pdf

Micro data

Waves of Household Budget Survey of the Central Statistical Office, 2007-2009

• No panel data• Monthly household records + annual interviews in early

next year• Monthly household records by minimum 1500 persons • Monthly households records sample distortion, top of

the income scale is truncated• Relatively large datasets:

– 2007: 7388 households, 19183 persons– 2008: 7274 households, 18946 persons– 2009: 7718 households, 19632 persons

Methodological remarks

• Individual equalised income (with e = 0.73 elasticity coefficient) rather than per capita income Using OECD1 consumption units no significant difference

• Expenditures = consumption + new construction, renovation, purchase of real estate

• Narrowed expenditures = consumption + installments related ot housing or real estate loans

• Consumption = current consumption + durable goods • Three types of deflation:

– using annual consumer price indices uniformly– using annual price indices by product groups – using monthly price indices

Consumption of purchased goods monthly data on prices of Jan 2007, deflated

by products

* Household contains at least one child under 14

% % % %

Role of installments for people having housing loan – bottom and

top deciles

Share of housing loan repayment in expenditures (%)Share of persons having housing loan (%)

Distribution of equalised consumption by product groups in

2007, total population

Distribution of equalised

consumption by product groups in 2007, bottom and

top income deciles

Changes of distribution of

consumption on current prices

Food

Household energy

Housing maintenance

Communication

Durables

Other

Changes of distribution of consumption,

deflated by product groups

Food

Household energy

Housing maintenance

Communication

Durables

Other

Inequalities

Income Expend. Consumption Income Expend. Consumption

22

2

1

2

21

21

21

)2( CVy

nGE

n

i

i

11

21

)1(1

n

i iynGE

Income Consumption

Consumption inequalities by regions