Regional Disparities in Consumption Behaviour: Italian Households in Time of Crisis

The relevant fact of the severe downturn due to the Great Recession is that declining consumer spending. The extent of the cutbacks in consumption expenditures differs among regions and also the distribution pattern across households differs. This paper examines how the 2008-9 crisis affected regional disparities in household consumption behaviour by analysing the distribution of the real total expenditure. Specifically, a mixture of regression models is used to explore the heterogeneity in total expenditure across regions and households by identifying groups of families with similar consumption behaviour as a function of certain socio-demographic and economic factors. The empirical analysis, performed on Italian expenditure data, suggests that there are regional differences in the pattern of consumption behaviour in different macro-areas in Italy and that within macro-areas differences in consumption behaviour and in its determinants among the groups reflect differences in consumption reaction across regions and households.