The Research On Effects Of Food Price’s Change On Chinese Urban Residents’ Consumption Structure

Consumer is a problem that many countries have attached great importance to.China is a populous country, the growth of consumer demand can largely promote theexpansion of production scale, promote sustained, rapid and sound economicdevelopment. In2011, urban residents’ consumer spending accounted for77.3%ofthe national consumer spending. As the inflation in recent years, rising food priceslead to inflation further, under such economic environment, how the China’s urbanresidents’ consumption structure will be affected by the problem is the focus ofpeople’s attention from all walks of life. In general, all kinds of consumer expenditureshare said the urban residents’ consumption structure. How the food price volatilitywill affect the consumption structure of urban residents in our country? The researchon this issue will help to know consumer demand in hot spots, draw up reasonablepolicies, improve residents’ life level, stimulate domestic demand effectively, andpromote the healthy growth of the economy. This is a topic that our country is facingin the present and will face in the future. It’s also the problem that must be solved inthe process of social development.Based on the theory and empirical analysis method, by the ELES model, co-integration relationship test, impulse response function and variance decompositionanalysis, using the Eviews6.0economic analysis software, I analyzed the urbanresidents’ consumption structure. The paper came to a conclusion about how the foodprices affect Chinese urban residents’ consumption structure in the short and longterm. In the short term, analysis of price elasticity was carried out on the date in2011.The results showed that the food prices cross elasticity of consumption demand ofurban residents in our country is negative. This means that rising food prices in theshort term will have crowding out effect on residents’ consumption demand. In long-term, the paper made an empirical analysis using data from1996-2011. The resultsshow that in addition to the clothing, service, equipment and facilities, other kind ofconsumer goods and food prices shows a negative relationship. Because clothing, service, equipment and facilities belongs to daily necessities. Demand has certainrigidity. When the price level rises, consumer spending appears increasing trend. Andgeneral improvement in people’s income level and living standard at the same time,also contribute to the increase in consumer spending.This paper mainly divided into the following several parts:First of all, the paper elaborated this topic’s background and significance,introduced domestic and foreign scholars research status about the consumptionstructure and the main framework of this article.The second part introduced related theory and several research methods used inthe empirical part in this article. Including the theoretical basis of the price effect, unitroot test, co-integration theory, VEC model, impulse response function and variancedecomposition.In the third section, based on the data in2011, by using the ELES model forempirical analysis, I draw the marginal propensity to consume, the own priceelasticity, the cross price elasticity and income elasticity of all kinds of consumergoods.In the fourth part, according to data from1996to2011, a total of16years, Idivided the consumer spending into eight categories. With the analysis methodsintroduced in the second part, the article made empirical study on the volatile foodprices’ impact on Chinese urban residents’ consumption structure, and concluded thatfood price volatility has a long-term influence on Chinese urban residents’consumption expenditure, and the impact of contribution rate on each type ofconsumer spending is different.In the end is the conclusion of this paper and relevant countermeasures andsuggestions.