A Study On The Inflation Affordability Of Urban Low-income Residents In China

Inflation has always been a major topic of concern to the Chinese and foreign economists.It is also a topic of common concern to the general public.The phenomena of "Jiang Youjun" Ginger's price rises dramatically),"Suan Ni Hen"(Garlic's increase in price makes people furious and sad)"Mei Chao Feng""(Coal is rather expensive.Mei Chao Feng is the name of one character in the popular noel and the film based on the novel,Mei means coal in English)emerges one after another.Under the situation of rising CPI,the general public obviously felt that prices had risen more dramatically,the money in their hands was not worth it,the actual disposable income was decreasing,and sometimes they did not dare to consume.It is even worse to the low-income residents who are more vulnerable.They do not have much wealth savings in banks and their income will not be high.Whereas the Engel coefficient of living consumption is relatively high,life will become increasingly difficult,and people will have to be frugal and fight against inflation,and as a result their living standards will decline significantly.At times,even their basic life hood is not guaranteed.Against this backdrop,this paper has combed the relevant literature and practical research on inflation affordability and stress testing.Practice has proved that:economic development in the process of rapid development will inevitably bring about a certain amount of inflation,but the impact of inflation can't exceed the capacity of the residents,must control the inflation pressure within the limits of the residents'affordability,otherwise it will cause social turmoil,the government must attach great importance to the issue of inflation.When considering other economic purposes,we should control inflation at a reasonable level and control it within the reach of the general public,especially low-income residents,without creating social problems,instability,or even trigger social unrest.How much inflationary pressure can urban residents bear?In particular,how low-income residents,as vulnerable groups,are able to afford the ability,which is the subject of this article.After literature review on inflation affordability and based on the analysis of the effect of"depriving the poor and empowering the rich"which results from inflation,this paper builds a measurement index system of residents' inflation affordability,and conducts a quantitative study of residents'inflation affordability.Borrowed from the general analysis method of stability in the banking system-macro stress testing methods and procedures,this paper measures the overall inflation affordability of low-income residents in China,and then measure the affordability of low-income residents in China's in overall and regional dimensions.The regions include the East,Central,West,and Northeast China.Finally,it summarized and put forward specific opinions and suggestions,and looked forward to the direction of future research.This paper consist seven chapters,the main research content is as follows:The first chapter is introduction.The main contents of this chapter introduce the research background of low-income residents'inflation affordability,the theoretical and practical significance of the research,the main content of the research,the technical roadmap of the research,the research methods,the main contribution of this article,and the shortcomings of the research.The second chapter is a review of relevant theoretical literature.It mainly reviews the inflation affordability theory from the perspectives of residents'income,wealth,psychology,and consumption.Then it reviews the theoretical literature on income and consumption of low-income urban residents.Finally it comes to the literature review on domestic and foreign macro stress testing.All these lay a solid theoretical foundation for subsequent research.The third chapter analyzes the influencing factors of the inflation bearing capacity of low-income residents in China and constructs a measure of their affordability.16 main influencing factors are analyzed through F-A.Three measurements including indexes for the endurance of consumer expenditure,income inflation affordability and comprehensive economic affordability are built which pave the way for further research.4.The fourth chapter macroscopically analyzes low-income urban residents'affordability on inflation.Based on the consumer price index,this chapter attempts to set up the urban residents' affordability index,establish the corresponding judging standard and quantitatively analyze the residents'inflation affordability of operational income,transfer income,wages income and property income.5.The fifth chapter measures residents'affordability and stress from the aspects of the explanatory variables selection,data sources and processing,model estimation and test,the construction of the scene and the affordability test,the selection and setting of macro stress testing scenarios index,situational stress test method,the valuation of macroeconomic factors and the measurement of inflation affordability in the stress scenario,conclusions and policy suggestions.6.The sixth chapter conducts regional tests and stress tests of residents'inflation affordability from the aspects of the regional tests and the empirical model of residents'inflation affordability,the regional comparison and stress tests of low-income urban residents'affordability.7.The seventh chapter is a conclusion and proposes prospect of further research on low-income residents'affordability.This paper comes to the following conclusions:The low-income urban residents'affordability on inflation is closed to its limits.It is found that the affordability parameters have been less than 1 in the last four years and beyond its scope.Among them,the middle-income residents'affordability on inflation is the highest and its parameters reached 1.10181.In order of affordability,it goes:middle-income,lower middle-income,lower-income and lowest-income residents.The China Statistical Yearbook counted the average coefficient of residents'affordability,it goes:the affordability of wages income(1.08243),property income(1.11549).,transfer income(1.11621)and operational income(1.17948).By use of quantitative analysis,this paper has found that the important degree of various factors is dissimilar for different regions.The impact of GDP growth in central and western region,commercial housing prices and level of education in eastern region,monetary supply and GDP growth in central region,government expenditure in western region and the growth rates of housing prices and fiscal spending in Northeast region is remarkable;The main contributions of this paper are as follow:1.The originality of research content:A reasonable definition of the measurement indicators of the residents'inflation affordability is made.At the national macro-economic level,this paper quantitatively analyses not only the inflation affordability of low-income urban residents but the affordability of operational income,transfer income,wages income and property income.The original content is difficult to find in many foreign and national literatures.2.The originality of research perspective:This paper carried out quantitative analysis systematically on inflation affordability from the perspective of the low income groups.Inflation affordability index put forwarded by Chinese and foreign academic field is relatively small nowadays,especially from the perspective of low income groups is rare.