A Study On The Influence Of Assets On Urban And Rural Residents' Consumption In China

Since the establishment of the market economy,China's economic development has made great achievements and the size of household assets is increasingly growing.At the same time,China's residents begin to diversify their assets and choose to save,to buy bonds,stocks and other securities with the aim of constantly accumulating assets and balancing the household spending.The increase of the household assets is the key to promote consumption and stabilize the economy.However,the contribution of consumption as a driving force for economic development of a country is relatively low for China's economic development.Based on this background,it is of great theoretical and practical significance to study the relationship between the residents' assets and consumption in China.The 18 th National Congress of the Communist Party of China put forward the idea of "increasing the income of residents through various channels",and this is another emphasis on property income after the 17 th National Congress of the Communist Party of China.Therefore,the study of the resident assets in China that limited to the financial assets can not reflect the choice of household assets comprehensively and completely.Housing,durable goods and other physical assets should be included in the study of the choice of residents of our assets.Based on the analysis of the western consumption theory and the existing literature and data,this paper firstly analyzes the current situation of household consumption and household assets,and combs the theory and transmission mechanism of the wealth effect of residents' assets.Secondly,using the theory of cointegration and error correction model the paper aims to analyze the relationship between urban and rural residents' assets and consumption using the theory of cointegration and error correction model,and then compares the differences between urban and rural residents' financial assets and physical assets' wealth effect.Finally,the study tries to provide policy suggestions for expanding domestic demand and supply side reform from the aspects of urban and rural income distribution,housing and financial market reform.According to the empirical analysis,this paper draws the conclusion.Whether it is urban or rural areas,income is the primary factor affecting the consumption of residents.The per capita assets of urban and rural residents are positively correlated with consumption,and the per capita asset wealth effect of urban residents is larger,but weaker than the stimulating effect of residents' income on consumption.Consumption of all residents and rural residents is negatively correlated with interest rate.The change of interest rate has a certain stimulating effect on consumption of rural residents,but has no significant effect on urban residents' consumption.Compared to urban residents,the wealth effect of rural per asset is weak.The reason may be that rural residents do not have a stable income source and the medical,education and other social security system is imperfect.In short-term,rural residents need to accumulate more assets to prevent future events of uncertainty,Which makes the wealth effect of rural residents weak.On the other hand,this paper divides assets into two categories: financial assets and physical assets.The paper aims to explore whether there are differences between urban and rural residents' financial assets and physical assets on consumption.According to the analysis of the cointegration results of financial assets and physical assets to residents 'consumption,it can be concluded that the financial assets and the physical assets of the urban residents have positive effects on consumption,but the wealth effect of the financial assets is weaker than that of the physical assets.The increase of the rural residents' physical assets promotes the increase of consumption,but the financial assets has a weak inhibition to the consumption.The reason may be the followings:firstly,the development of China's financial market is not perfect and the irrationality of stock investors leads to the weak wealth effect,that is,the wealth effect of China's stock assets is not revealed;secondly,the traditional idea of precautionary saving makes the financial assets of the residents who face the economic uncertainty distort the consumption in the long run;thirdly,the traditional sense of consumption of our residents have not changed.The residents regard the current and the previous saving as a guarantee to avoid risks;Fourthly,unlike western countries,the relationship between fathers and offspring of Chinese residents is close.Households pay more attention to the intergenerational inheritance of assets.Parents will choose to accumulate wealth to reduce the economic pressure of their offspring,and hope to inherit from their children.Therefore,from the perspective of the motive of wealth bequest,the wealth effect of urban and rural residents may be weaker than that of the United States and other develop.