Government And Residents Of The Game Based On The Propensity To Consume

Consumption,investment and net export are three components of one country's GDP.Consumption is the most important part.But the consumption rate of Chinese households has descended continuousiy.Especially these several years,the descent is more obvious.In 2003,the consumption rate of Chinese households reach the lowest after the reform and opening up.The government has taken a series of macro policy to stimulate the households' consumption but didn't achieve the expected goal.The Chinese researchers has studied this phenomena by means of the western consumption theory. These years more and more researchers use the theory of precautionary saving to study this issue.In fact,it's a game when the government take macro and micro policy to stimulate the households' consumption and the households react to the government's policy.This paper bring game theory and analytical way to this study,on base of a series of assumptions the paper build the offer-counteroffer model between government and household.The household's consumption utility function is assumed as the optimal cross-sectional model.The household's consumption section is divided into two periods.One is the present,the other is the future time.Then analyse the game model.The analysis include two parts.One is under the complete information assumption.This is the more important part of the paper.In this part,give the utility function of household different assumption then analyse the game model.The second part is under the incomplete information.This part is the extension of the first part.After the analysis,it concludes that the game between our government and households is an cooperative offer-countoffer game.The implement of government's utility depends on the implement of households' utility. Households is in the passive position in this game but they have enough ability to bargain with the government.The last,on basis of the former analysis the paper give the experiential evidents of the conclusion and give some suggestions to the government's policies which stimulate the household's consumption.