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Research Of China Resident Consumption Function

Posted on:2012-02-29Degree:MasterType:Thesis
Country:ChinaCandidate:D Q HeFull Text:PDF
GTID:2189330335963631Subject:Quantitative Economics
Abstract/Summary:PDF Full Text Request
The high level of saving, investment as well as low consumption is three long-term problems exist in China's macroeconomics. In the long term, the whole economics will lose the power to develop if saving, investment and consumption can't keep appropriate proportion with each other. The explosion of global financial crisis started from the USA has struck the world's economics heavily, especially several countries which have long, deep relationship with America. As a major business partner of America, China's export-oriental economics was subjected to great recession, brought great pressure to the economic growth of the nation. In this condition, analyze the country's consumer behavior which suitable for China's basic consumption function is of great significance.Western economists have paid great attention to the analysis of consumption function since the subject was established, and several of them were awarded the Nobel Prize. But in China, the research on its own consumption function started very late, probably no earlier than 1978, the year of the reform and opening policy was launched. Furthermore, the research methods were quite simple, most of them just used domestic economic data to estimate the parameters of the specified consumption function model, evaluated the statistical quality of these parameters, and then judge the model fitting China's economic figures or not. These methods did not discuss several assumptions relating the background condition and inner urge of consumer's behavior which may most fitting China's actual condition, making the empirical results unconvincing. This paper at first analyzed the external environment condition and the inner push of China's consumers. Based on the analysis, it can be concluded that the residents' consumption behavior should be accord with the life-cycle path, namely, the consumers' behavior is characteristic for the cross-time planning, "forward-looking" consumption activity. And then a representative life-cycle consumption function published by F.Modigliani and his colleagues applied to analyzing the consumption behavior of urban residents and rural residents. The statistical results prove both behavior path of urban residents and rural residents are conforming to life-cycle hypothesis theory. In order to research the uncertainty of life, which majorly brought by reforming policy in economics and politics, how effect the spending activity, the author therefore architect the state space model, use an algorithm of Kalman filter to estimate the variable parameter series. It turns out the marginal propensity to consume of rural residents is higher than town residents', but the extent of life cycle planning of urban residents is much deeper than rural residents. And the result also shows "ratchet effect" is exist in both sides, but the urban residents are more prone to maintain the usual level of consumption no matter their income reduce. At the end of this paper, some corresponding policy suggestions which may help promoting personal spending are put forward.
Keywords/Search Tags:Life-cycle hypothesis, marginal propensity to consume, ratchet effect, state space model, Kalman filter
PDF Full Text Request
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