Analysis of Consumer Demand in The European Union Countries Based on The Working Model: Spatio-Temporal Approach

Abstract :

The article presents an analysis of consumer demand in the European Union countries in the years 1996 - 2017. The aim of this paper is to analyse changes in household consumption expenditure caused by changes in the level of disposable income of households and the imitation effect. Economic changes in the EU countries influence disposable income of households, and as a result cause changes in their level and structure of consumption. The analysis concerns the level of expenditure on two types of goods: food goods, as well as superior goods, which include expenditure on restaurants and hotels, recreation and culture. The model proposed by Working was used to analyse the demand for both types of goods. In addition, in order to show the impact of the imitation effect on the level of consumer spending, the Working model was extended to include spatial effects - i.e. the impact effect of consumer spending and disposable income level of households from neighbouring countries. The study uses spatial autoregression models (SAR) and spatial error models (SE) that allow estimating and examining the statistical significance of spatial effects on consumer spending.