The Research On The Effects Of People's Livelihood Finance On Residents' Consumption Under The Background Of Crossing Middle Income Trap

According to the World Bank's income group,China has become a lower middle-income country since 1998 and in 2010,China has changed into an upper-middle income country.But at the same time,China's economic development has entered a new normal and the decline in economic growth makes the structural contradictions of investment,exports and consumption seriously imbalanced,which has also increased the risk of falling into the middle-income trap.Therefore,in order to timely change the mode of economic development and avoid falling into the middle income trap,our government has implemented a series of fiscal policies aimed at improving the consumption capacity of residents and easing the worries of residents' consumption to improve the consumption through the expansion of fiscal expenditure,especially in the field of people's livelihood.However,at the same time,China's indirect tax as the main tax system has a strong inhibitory effect on the consumption of residents and the two did not form a corresponding force.Therefore,it is necessary to optimize the adjustment of the people's livelihood financial mechanism to better promote the expansion of the residents' consumption,to achieve "middle income trap" across.in order to better realize the transformation of economic structure and step into the middle income trap.Most of the existing research focus on the linear impact of people's livelihood expenditure on residents' consumption while rarely consider the impact of people's livelihood revenue and expenditure on the consumption of residents and the possible non-linear effects.This paper attempts to make up for the shortcomings of existing research.First of all,based on the background of stepping across the "middle income trap”,the paper analyzes the "inverted U-shaped" threshold effect of people's livelihood of the income and expenditure activities on the consumption of residents from the view of static structure and dynamic change process of residents' income.Then,by using provincial panel data form 2002 to 2014 and setting residents' income as the threshold variables,we conduct the "threshold effect" panel model to analyze the nonlinear threshold effect of fiscal activities of people's livelihood on residents'consumption.The results show that for the consumption of urban residents,whether the promotion or the inhibition of the people's livelihood financial expenditure on the consumption of urban residents.It shows the double threshold effects.But for the rural residents,they all appear a continuous increase of double "inverted U-shaped"threshold effect.Meanwhile,combined with the two positive and negative effects of the people's livelihood financial revenue and expenditure activities,the final effect of the people's livelihood finance has played an important role in stimulating residents'consumption.Furthermore,based on the current stage of development of residents'income,this paper uses the fiscal activities of people's livelihood themselves as the threshold variables for a further empirical test.The test results show that the impact of people's revenue and expenditure activities on residents' consumption increases gradually with the expansion of the scale of fiscal activities of people's livelihood.Finally,based on the theoretical and empirical analysis,this paper puts forward the relevant policy suggestions to improve the proportion of the people's livelihood expenditure and improve the structure of the tax system,so as to give full play to the positive effects of the people's livelihood on the residential consumption and then successfully cross the middle income trap.