Determinants of household consumption in Serbia: Methodological approaches and empirical results

Abstract

The subject of this paper is to quantify the impact of income (household income) which is a key economic variable that determines the framework for personal consumption of households. In addition to income, the influence of household regional affiliation, household size, socio-economic status of the household, gender, age and level of education of the household head -variables that independently affect consumption, increasing or decreasing the influence of income as the main explanatory variables, was examined. The aim of this paper is to provide insight into different methodological approaches to empirical / econometric research of determinants of consumer demand, on the example of empirical analysis of family budgets of households in Serbia. Based on the survey on the consumption of 6,354 house holds in Serbia, which was conducted in 2019, according to the unique methodology of the European Agency for Statistics, by the Statistical Office of the Republic of Serbia, the basic parameters of consumer demand were assessed. Two econometric approaches were applied: a model based on complete systems of regression equations and a model based on one regression equation. The obtained empirical results are in accordance with the findings of most econometricians of applied consumer demand analysis.