Consumer behavior in the Republic of Karelia: need for state regulation

The economy of the Republic of Karelia is in the difficultsituation in last years. The volume index of gross regionalproduct and the volume index of investments in fixed capitalare steadily decreasing, the number of unemployed people isgrowing, the volume index of retail trade turnover hasunfavorable trend according to the information fromKareliastat. It all indicates economic crisis. Scientists of theHigher School of Economic have assigned the Republic ofKarelia to the group of regions with low budgetary security,high level of debt load and medium and big budget deficit. Allthis puts on the agenda the search for ways to increase thegross regional product and revenues of regional and localbudgets. Consumption management is the complicated systemwhich helps to achieve growth of aggregate demand andproduction volume, overcome the crisis and stimulate theeconomic growth. The government has a wide variety of waysto influence consumer behavior, because it has a huge range ofeconomic, political, ideological and administrative resources.Government regulation affects households and their financialdecision-making through the key interest rate, the size of socialpayments, determination of the minimum wage and othertools. Financial decision-making is conditioned by the size anddynamics of disposable income and other factors among whichpolicy of state regulation plays a significant role.