The Impact Of Household Asset Price Fluctuations On Consumption Of Urban Resident

In recent years,Chinese economy has maintained growth,but its growth rate has slowed.As one of the troikas driving economic growth,demand has increased in recent years in GDP,but compared with developed countries,domestic demand accounts for the proportion of GDP is lower.Especially since 2020,the outbreak of the New Crown epidemic has had a great impact on China's consumption.The current situation of insufficient domestic demand is more prominent under the epidemic.In the short term,stimulating consumption can alleviate the epidemic.In the long run,the impact of the economy on consumption will help China's economic transformation under the new normal of the economy.Taking into account that in recent years,bank financial products with a rigid payment income higher than the interest on deposits are very popular among residents.Therefore,the paper will simultaneously consider three assets: housing,stocks,and bank wealth management products.In addition,unlike previous literature on wealth effects,the paper uses data from 35 large and medium-sized cities because the wealth effect of assets is heterogeneous in cities.The thesis divides the data into four hierarchical city groups for research according to the division of cities in my country in the "2019 City Business Charm Ranking".The purpose of this paper is to analyze the impact of changes in housing prices,stock prices,and bank financial product returns on the consumption of urban residents at different levels of cities.The paper will use real average house price growth rate,Shanghai composite index growth rate,and actual one-year deposit interest rate to measure housing price changes,stock price changes,and bank financial product income;and use 35 large and medium-sized cities from 2004 to 2018.Sample panel data and mixed OLS regression model to analyze the impact of asset price changes on consumption.Judging from the results,the impact of house prices on the consumption of urban residents at various levels of cities is not the same.From a nationwide perspective,rising housing prices have a slight boosting effect on consumption,while housing assets have a negative wealth effect for urban residents in first-tier cities.For new first-tier and third-tier cities,housing price fluctuations have not been found to have an effect on consumption.Impact,for second-tier cities,rising housing prices have a boosting effect on consumption.The rise of the stock index has no significant wealth impact on the consumption of urban residents in all levels of cities.However,during the bull market,it has a significant positive wealth effect on the consumption of urban residents in first-tier cities.Finally,the increase in the income of bank financial products has a negative wealth impact on the consumption of urban residents in first-tier cities and new first-tier cities.This may be because risk-averse urban residents prefer to invest in bank financial products with stable returns,so they will reduce other commodities consumption.The policy significance of the thesis is to control the irrational rise of house prices and establish a reasonable housing security mechanism for residents who have a tendency to purchase houses.Promote effective financial reforms to reduce the volatility in Chinese stock market,and tighten the rules governing wealth management products.In addition,as far as macro-control is concerned,policy makers must take into account the differences between cities at different levels,and it is very important to implement policies according to the city.