The Relationship Between Consumption And Income With Different Degree Inflation

The research about a time series variable co-integration relationship in econometrics methods is a major breakthrough at the end of nineteen eighties to since90time. The basic idea of the method is that if2or more than2of time series variables is non-stationary, but they have some linear combination showed stability, these variables have long-term equilibrium relationship between the cointegration relationship, Which in economics is widely used, this paper will use it to analyze the consumption function.Consumption function macro economics is a very important function, It be considered core equation in Western macroeconomic models,The research about consumption function theory in Chinese academic circles is from80times,when has been incorporated into China consumption function macro economic model.After Keynes, many economists on the consumption function conducted a series of research and improvement, with the development of economy, people have had more thought about consume function, such as:Du Sen Berri thinks consumer expenditure is not only affected by the influence of income, but also affected by the surrounding people’s consumption behavior and income and consumption of interrelationship; Mo Di Lian, argues that current consumption:consumers not only affected by the current income, but aslo the following period income expectations and the beginning of the assets and personal age size etc..In the study of consumption function,The theories usually to adjust income remove the consumer price index influence of CPI, the aim is to make different period income values are comparable,for example:this year100yuan and100yuan10years ago is not to be equated, after adjusting, they can be compared, this is without a doubt.But we ignore a problem when we are doing this work, Is it right that CPI had no effect on the consumption function? No. We will see its role:when its value is low, it do not have too big impact on social life, when its value is high, it will cause a redistribution of property, especially during the economic diversity today, CPI level have great influnce on the development of the national economy, the RMB exchange rate, bonds, futures and stock market price trend, finance income and expenses, wages of the employees,CPI rise or fall directly lead to market of macroscopical adjusting control anticipates changes, also on wages, rents, interest or tax and currency flow is adjusted, it can also be used for certain monetary assets and liabilities capital price adjustments. Since the CPI is so importent, how have not it matter with consumption function?In view of this, the author analysis relationship of CPI and consumption function by datas of China’s nominal GDP from1978to2007years,by expenditure approach GDP name, the total consumption of residents and the total revenue of CONS TAX, the price changes in the consumer price index CPI of these data, combined with the econometric model, using statistical software, the results showed that:high or low inflation will affect the consumption and income of coefficient.The first part of this paper introduced a few simple used concepts, including inflation, consumer price index, consumption function and the domestic and international research status, the second part introduces the effects of inflation, cost, the third part introduces the econometric knowledge including econometrics concepts, models and modeling steps, the fourth part introduces time series, smooth, co-integration and error correction model, the fifth part is to analy the consumption function and the relationship of them.