The effect of the crisis on consumption György Molnár and Zsuzsa Kapitány Institute of Economics Economics of Crisis, Education and Labour SEBA – IE CASS – IEHAS, Chinese - Hungarian International Conference 30 th June -1 st July 2011, Budapest

Source: HCSO : National Accounts Consumption: 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):

Share of defaulted retail loans (%) Source: PSZÁF (Hungarian Financial Supervisory Authority): The HFSA’s Second Risk Report in 2010,

Micro data Waves of Household Budget Survey of the Central Statistical Office, 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, persons –2008: 7274 households, persons –2009: 7718 households, 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

Income Consumption

Consumption inequalities by regions