A Hierarchical Model for Analysing Consumption Patterns in Italy Before and During the Great Recession

Abstract

The paper aims to explore how the Great Recession of the twenty-first century has impacted on the consumption behaviour of Italian households. Following a hierarchical approach, the study investigates differences in consumption behaviour at both household and regional levels. Using micro data on Italian Household Expenditure for the years 2002, 2006, 2010 and 2012, multilevel and two-step regression models have been estimated. The analysis has been performed for four different consumption categories: food, housing, work-related and leisure. The analysis reveals that the economic crisis led to increasing income elasticity for each category of consumption, especially for food, the most essential basic good. The crisis also created more marked regional disparities in the average level of expenditure.