Study Of Chinese Urban Residents' Consumption Volatility And Consumption Risk

In this paper, we test the fluctuation of urban household consumption in China using household survey data between 2000 and 2006. The results imply that, generally the volatility of consumption is lower than that of income, which is consistent with rational expectations theory and the empirical results of foreign countries, but inconsistent with results using macro data of China. From perspective of households'dynamic decision making process, consumption is susceptible to the change of disposable income. Furthermore, the rise of part with higher volatility in the structure of consumption accounts for the rise of consumption risk, while the rise of the proportion of employment in secondary industry and the progress of personal consumption credit will help to reduce the consumption risk in China.