Theoretical And Empirical Study On Inadequate Household Consumption Demand And Macroeconomic Policies Effect

As one of the three carriages in the economic growth, consumption demand is the largest scale and the most steady part in the economic growth. However, inadequate consumption demand has arisen in China since 1990s, which has posed a serious constraint to the country's fast, sustainable and steady economic development. Thus studying the character of Chinese household consumption demand during the economic transition, analyzing the reasons of inadequate consumer demand and putting forward the solutions are not only valuable to the consumption theoretical research, but also important to enhance the effect of macroeconomic policies.The paper first comments the consumption theory in the western economics especially reviews the latest development in this area, which set up the theoretical foundation for the following text. The second chapter states the issue of Chinese households'inadequate consumption demand characterized by relatively low of consumption rate and consumption tendency. The third chapter investigates the forming mechanism of Chinese households'inadequate consumption demand during the economic transition: Firstly studies the representative consumer's consumption decision-making behavior by constructing a mathematical model which contains the uncertainty factor and the liquidity constraint. The result indicates that the uncertainty factor and the liquidity constraint will influence the consumer's behavior. Secondly empirical estimating on Chinese consumption function from the macroeconomic aspect , which concludes that income, uncertainty , liquidity constraint and income disparity are all have impacts on Chinese household consumption. The forth chapter analyzes the relations between the consumption demand and the effect of macroeconomic policy, and then points out that China's macroeconomic policy tendency should be more dependent on consumption to stimulate the economic growth. The last chapter studies the main factors that restrict Chinese household consumption demand and proposes the strategies of expanding consumption demand. The main policies include increasing employment and income of household, perfecting social security to reduce the uncertainty,accelerating the consumption credit to lessen the liquidity constraint, and narrowing down the income disparity. From the above measures to stimulate Chinese household consumption demand and faster the economic growth.