The Empirical Research Of Wealth Effect On Consumer Behavior

The wealth effect of stock market means that the fluctuations in stock price will affect the wealth of the investors which would in turn have an impact on the investor's consumption expenditure. The wealth effect of stock market has been affirmed the government of the United States. Therefore, after the rapid development of the stock market in recent 30 years and the stock ownership reform in China, the research on the wealth effect of stock market has important significance to the improvement of the forecast accuracy of economic trends, the monetary policy and the stimulation of consumption.This paper firstly reviews the stock market wealth effect from the consumption functions and the behavioral finance theory. Then, after the analysis of the influencing mechanisms on consumption and the effect factors, on one hand, we confirm that the wealth effect of the stock market is weak before the stock ownership reform in the long run, but then becomes more obvious after the stock ownership reform, through the empirical research by using the 2001-2009 data and treating the stock ownership reform as the virtual variable. On the other hand, we select the falling stage of 2001-2005 and the rising stage of 2005-2007 to study the direct wealth effect, the indirect wealth effect and the extrusion effect respectively. And we find the effect of the rising stage is more obvious than the falling stage when we researching the asymmetric effect based on the above study. Finally, this paper analyzes the reasons of the empirical analysis result, then integrates the theoretical conclusion and the practical conditions, and put forward reasonable recommendations to expand and rational use the wealth effect of stock market...