The Study On The Economic Mechanism Of The Influence Of Urban Household Real Estate Wealth On Consumption

In recent years, the Chinese government regards expanding residents'effective demand as a key strategic to promote the development of the economy. According to the life cycle-permanent income hypothesis, household wealth (assets) and income are two major factors that affect consumption. And real estate wealth, as the most important part of the household wealth, which having influence on the consumption causes widespread concern.This paper which based on life cycle-permanent income hypothesis and Chinese reality, analyzes the transmission mechanisms of the real estate wealth effect on residents' consumption. The paper puts forward that the transmission mechanisms influence families equipped with houses include direct wealth effect, liquidity constraint effect, and confidence effect, and the transmission mechanisms influence families equipped with no house include liquidity constraint effect, substitution effect, and budget restrict effect. What's more, a theoretical assumption about the influence of the real estate wealth on Chinese residents' consumption was proposed. Then, the paper does empirical test on our country real estate wealth effect on consumption by using the large-scale micro data CFPS and concluded as follows:Firstly, for the overall household data, the owner-occupied house wealth effect is not significant, but the non-owner-occupied house wealth effect is significant, and very weak. It indicates that the overall real estate wealth effect is weak, which may be related with imperfect housing finance system, the liquidity constraints due to outstanding mortgage, as well as Chinese traditional thinking. Secondly, real estate wealth effect is positive on families equipped with houses, while it is not significant on families equipped with no house, indicating that the increase in real estate wealth will promote families equipped with houses to consume, but it has little influence on families equipped with no house. Thirdly, When comparing two different situations of the family equipped with houses, the owner-occupied estate wealth effect is significantly positive on families only equipped with owner-occupiedhouse, and it's not significant on families equipped with owner-occupied and non-owner-occupied houses, while the non-owner-occupied real estate wealth effect is significantly positive, indicating that on families only equipped with owner-occupied house, changes in real estate wealth mainly affect residents' expectations of future real estate values, thus affecting household consumption; on families have two kinds of houses, it affects the household consumption by affecting investment houses'value. Fourthly, from the difference examination of real estate wealth effect, the household consumption in middle-aged group is the highest with the householder ages 40 to 49 year-old, and the elderly have a strong bequest motives and precautionary savings motives.