The Empirical Analysis Of Relationship Between Consumption And Economic Growth

From the total demand form of Macro-economic, the engine of the economic growth is constituted by the consumption, investment and net export, but the effect of these three factors in economic growth is different. Economic growth of our country has got great achievement since the implementation of reform and open-door policies. The amount of the economy is increasing rapidly, and investment and net export play an important role. But as economic growth pattern transforming, the effect of consumption is more and more outstanding in the significant period. It has become a crucial factor to maintain economic stability and continual growth. So it is of great practical significance to study the effect of consumption in economic development. The article analyzes the relationship between the consumption and economic growth to research the important task and potential of consumption promoting economic growth in the transformation of economic growth pattern. Then it gave some practical and effective advice on policies.The article defines consumption and economic growth first. On the basis of definition, it analyzes the change of consumption rate, consumption elasticity coefficient, the contributive rate of consumption and the degree of association between consumption and economic growth. Then, according to co integration theory and vector error correction model, it analyses the long-term balanced relation and short-term dynamic relationship between consumption and economic growth in China. Finally, it summarizes the mainly conclusions that consumption and economic growth do have the long-term relation and that consumption can promote the economic growth. According to the conclusions, it gives some positively suggestions to stimulate consumption.