The Residential Consumption Decision-making During The China's Transition Period

During the transition period, China's residential consumption has grown rapidly; housing consumption and investment spending have also become an important matter. In recent years, however, there have been high residence prices, investment fluctuations and stagnant consumption and other issues, which have become a major obstacle to China's development of residential consumption. On the other hand, in the global economic crisis (which triggered by the subprime mortgage crisis), by stimulating consumption demand, driving the economy rebounding has important practical significance.In the context of transition (such as income growth, demand differentiation, capital deepening), this paper attempts to analyse the Chinese residential consumption decision-making by using China consumption-related empirical data. Mainly discusses the three aspects:(1) using available statistical data, the paper study the major factors which will affect the residential consumption of China's urban and rural residents, and thus to build China's macro-residential consumption function; (2) a trial to establish an assets choice and residential and job location decision-making model, by the method of numerical simulation to explore the possibilities of a variety of residential consumption decision-making; (3) the introduction of income growth, demand differentiation and capital deepening factors to examine the determination of China's housing price.By theoretical analysis and empirical analysis methods, the paper foucus on several important issues in residential consumption decision-making. Here are the main conclusions:About China's residential consumption function, empirical analysis shows that:(1) China's residence consumption (specially, the urban residents) cannot be explained by the complete market model and can better apply the permanent income and life cycle hypothesis (PILCH) model. The introduction of rural-urban differences that to some extent improved the estimation results for urban residents; but for rural residents, the impact of consumer behavior patterns are not significant; (2) the consumption patterns and consumption functions are different for urban and rural residents. Further empirical results show that the consumption of rural residents is more affected to the changes of the current income, while the urban residents are more influenced by the persistent income. Add the factor of urban-rural differences, which is not affect the consumption of urban residents, but an explanatory power increase of PILCH to rural residents; (3) "Housing Reform" take effect to the urban residents by giving more explanatory power to the current income.On the assets choice and residential and job location decision-making issue, obtaining some basic results:(1) the optimal housing service "value" exactly equal to its sharing ratio product current revenue; (2) transport costs caused by the inconsistency of residential location and job location, which can't determine buying a house or renting a house, but will have an impact on where (in urban area or rural area) to make the decision; (3) "Capital-labor ratio" plays an important role on the housing price differences and the wage rate differences between the urban area and rural area; (4) equilibrium simulation shows the possibilities of a variety of residential consumption decision-making, such as internal migration between the urban area and rural area and identity swapping between the "renters" and the "owners".The introduction of income growth, demand differentiation and capital deepening factors, we find:(1) for the two types of consumers, when the "investors/ speculators"(B-type consumers) increase of 1%, the urban housing price will increase 0.3%; when the "conservatives"(A-type consumers) increase, the urban housing prices will decrease; and the B-type consumers have more impact on housing price; (2) economic fundamentals have an important influence on housing prices. From the empirical results, economic fundamentals have a positive role in promoting house prices; (3) under the condition of capital deepening, the differences of urban-rural "capital labor ratio" can partly explain the differences of urban-rural housing price.Based on the existing research results, the innovation of this paper can be summarized in the following areas:First, trying to create a link between the "portfolio selection model" and "residential and job location decision-making model", and using it to explain the simultaneously determined on portfolio selection and job location decision-making, which is the main theoretical contribution of the paper.Second, the building of China's macro-residential consumption function and the empirical research in the determination of China's housing price, in some respects, fill a gap in domestic research.Third, based on the empirical results, the proposed residential consumption policy will be incentive and has a strong application value.