Soviet Household Saving Function

In this paper, the Soviet household saving function is estimated using reconstructed data from the unpublished archival material: the Soviet family budget survey data. In addition, a shortage indicator is developed to capture both household purchasing power in comparison with the availability of consumer goods in the official market and the spillover of the household demand for consumer goods from the official retail market to the secondary one. A long-run solution of the Soviet household saving function, which includes a shortage indicator as one of the independent variables, is estimated using these data. The reliability of the long-run solution is confirmed by the short-run dynamics of the Soviet household saving function, which satisfy super-exogeneity, parameter constancy, and several diagnostic tests. The highly significant coefficient of the shortage indicator suggests that Soviet household saving behaviour was affected by shortages of consumer goods during 1965–1989. This revised version was published online in July 2006 with corrections to the Cover Date.