Regional Differences Empirical Research In The Relation Between Consumption And Economic Growth In China

In recent years, with the unsustaining of the growth models of relying oninvestment and export trade to drive economy, consumption as the driving force foreconomic growth, is one of the important direction of researching economic growth.Meanwhile, because the economic development is imbalance in the different regions inChina, especially the difference is significant in eastern, central and western regions. Ithas the adverse effect for China’s rapid economic development and social stability, soresearching the difference in the relation between consumption and economic growth ineastern, central and western regions and the eastern, central and western consumptiondifferent reasons, will help each region to make targeted macro control with combiningthe characteristics of them, be better to scientifically guide consumption and optimizethe economic structure and solve the problem of the imbalance of regional economicdevelopment in China. Many scholars are researching the relationship betweenconsumption and economic growth, but most of them analyze the national overallsituation, less of them have analyzed the regional difference, the methods of them usedare single equation analysis, structural simultaneous equation method and vector autoregression analysis, etc. In this paper we use the structural equation model method toresearch the relationship between consumption and economic growth from the overalland regional, it is a new try, to further improve the theory on the relationship betweenconsumption and economic growth, and enrich the relevant empirical research method.This paper combines theory with practice according to the following three differentaspects,we builds the structural equation model in the relationship between consumptionand economic growth, First of all，it constructs the relationship between consumptionand economic growth by a structure equation model and uses the provincial panel dataof29provinces (municipalities, Autonomous region) from1992to2010in China, byusing maximum likelihood estimation method to analyse empirically the relationshipbetween the consumption and economic growth in China. The results show that the pathcoefficients between consumption and economic growth are all positive, and suggest the consumption has significant positive effects on the economic growth and give the effectof different degrees on different consumption to promote economic growth. Secondlythey respectively establish eastern, central and western structural equation models in therelationship between consumption and economic growth, through the model analysisand inspection, the conclusion is that the regional consumption has a promoting effecton economic growth directly or indirectly. Though comparing to the three models, weanalyse the same consumption of different regions of the different promoting effect oneconomic growth, and find out the reasons for this difference. Finally we choose thecentral region as representative to establish structural equation model between theconsumption and economic growth relationship of central urban and rural residents,through the model analysis and inspection, we give the effect of different degrees onconsumption to economic growth of urban and rural residents, and analyze the reasonsof the differences.