Giffen Goods in a Transition Economy: Subsistence Consumption in Russia

22 Pages Posted: 29 Feb 2012  

Yochanan Shachmurove

City University of New York, CUNY City College of New York - Department of Economics; The University of Pennsylvania - Department of Economics

Janusz M. Szyrmer

CASE - Center for Social and Economic Research

Date Written: October 1, 2011

Abstract

In the last decade, events outside the realm of Western economics have been viewed as “paradoxes.” We focus on the Giffen paradox, and argue that Giffenity is consistent with a generalized law of demand. We confirm the occurrence of Giffenity in Russia during the early 1990s. During this period, people reduced consumption of less affordable meat and fish despite a decline in their relative prices, while augmenting their consumption of more affordable potatoes and bread, a significant increase in relative prices of the latter goods notwithstanding. We conclude that incorporating Giffenity into current economic theory will make it more robust.

Keywords: Giffen goods, inferior goods, subsistence, Russia, household

JEL Classification: D1, E2

Suggested Citation

Shachmurove, Yochanan and Szyrmer, Janusz M., Giffen Goods in a Transition Economy: Subsistence Consumption in Russia (October 1, 2011). Frontiers in Finance and Economics, Vol. 8, No. 2, pp. 27-48, 2011. Available at SSRN: https://ssrn.com/abstract=2012482

Yochanan Shachmurove (Contact Author)

City University of New York, CUNY City College of New York - Department of Economics ( email )

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New York, NY 10031
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The University of Pennsylvania - Department of Economics ( email )

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Janusz M. Szyrmer

CASE - Center for Social and Economic Research ( email )

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+48 22 828 60 69 (Fax)

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