The Empirical Analysis For The Influence Of The Policy Of "Home Appliances Going To The Countryside" On Rural Households’ Consumption

In order to stimulate rural consumption, rural subsidy program was implemented inShandong, Henan and Sichuan provinces in December2007, and extended to the otherprovinces of the country in December2008and February2009. But whether the subsidyprogram is really driving the consumption of rural households, and to what extent, is asubject to be studied.With the economic data from2005to2011of59cities in Shandong, Jiangsu,Henan and Jiangxi provinces, we established panel data models to analyze thestimulating effect of this subsidy program to home appliances’ consumption, thesubstitution effect to other goods’ comsuption, the total effect to the total householdconsumption of rural households. To this end, we selected per capita expense onappliances and services, per capita expense on other goods, per capita total expense onhousehold consumption as explained variables, and selected four dummy variables forthe years the program has been implented, per capita net income of rural households, theratio of total value of imports and exports by region to GDP by region and six yearlydummy variables as control variables to establish three different panel data models. Tobe prudent, we compared the coefficient estimators of fixed effects model, randomeffects model and first-order differenced model together. Usually a fixed effects modelis most persuaive in policy analysis, we will focus on estimators in the fixed effectsmodel as the primary basis for analysis.Regression analysis of panel data models showed there was a strong stimulatingeffect of the subsidy program to the home appliances’ consumption and the effect wasincreasingly bigger as time passed. Regression analysis also showed no significantsubstitution effect of the program to other goods’ comsuption. Finally, the modelshowed no significant impact on the total household consumption of rural households.The reason may be that the expenditure on appliances and services accounted for only asmall proportion of total consumption expenditure.Finally, we should continue to implement other policies to stimulate ruralconsumption. Also, we gave some policy recommendations. More products should beincluded in the subsidies and the time of the implementation of the program should be lengthened. Also we suggested that in subsequent financial subsidies comprehensiveeffect should be considered, not only the direct stimulating effect but also substitutioneffect to other goods.