The Impact Of House Price On Consumption Upgrade

In recent years,with the goal of changing the mode of economic development and optimizing the economic structure,economic growth has gradually shifted from relying on investment to consumption.China has clearly stated that it is necessary to expedite the removal of institutional barriers that restrict residents' consumption,and promote the upgrading of physical consumption and service consumption.Against this background,making the study on influencing factors of consumption upgrade and its transmission mechanism is particularly urgent for improving the consumption structure of residents.This research focuses on: Does consumption structure of urban households' upgrade in China,and what is the upgrade trend and direction? Does there exists heterogeneity of the consumption structure upgrade owing to difference in various household characteristics? Does the rise in house prices have an impact on the upgrading of household consumption? Does the continuous rise in house prices affect the household consumption structure through household debt,and what is the mechanism and effect? Based on these research goals,this paper starts from the theoretical and empirical aspects to carry out research on the internal relations of house prices,household debt and household consumption upgrade.Firstly,this paper reviews definition and measurement methods of consumption upgrade,the main factors affecting consumption upgrade,and the impact of house prices on household debt and changes in consumption structure.Secondly,based on the literature review and present situation analysis,the path mechanism of house price fluctuations affecting consumer institutions and the impact of house prices on household mobility constraints are proposed.It is suggested that house price may affect household consumption structure by affecting household credit decisions and credit levels.This paper uses the family tracking panel data from Chinese Family Panel Studies(CFPS)in 2011,2013,2015,and 2017.It includes 14500 samples from a total of 3625 urban households in 112 cities in China.And firstly,measures the consumption upgrading direction and changing trend of Chinese urban households by Quadratic Almost Ideal Demand System(QUAIDS).Secondly,the paper explores the impact of the continuous growth of house price on the upgrading of household consumption structure through the dual fixed-effect model of time and area.Thirdly,this research focus on the mediating effect of accumulated household debt on the consumption structure.Finally,we make heterogeneity analysis based on household income and household housing status and the robustness test by using time-individual double fixed effect model and replacing explained variables.The main conclusions of the paper are as follow:(1)Urban residents in China have a strong tendency to spend on household equipment,education,culture,entertainment,health care,and other types of consumption,while consumption expenditures for subsistence are always less than the growth rate of total expenditures.Consumption upgrade trend of urban residents in China is significant.The consumption structure and consumption upgrading trend of households with small population size and household debt are better than those of low-income,large population and debt-free households.(2)The rise of house price has not significantly promoted the overall level of urban household consumption,but it has significantly improved the proportion of household equipment,education,culture and entertainment,medical care,and other types of expenditure.(3)The increase of house price will significantly increase the probability to take out loans and scale of households' debt.And it also will promote the upgrade of household consumption structure by increasing scale of households' debt level to relax the liquidity constraint.Particularly,the increase of house price promotes the upgrade of household consumption structure mainly by expanding the scale of nonhousing loan liabilities.(4)The rise of house price has a significant promotion effect on the consumption upgrade of high-income households,but it has not a significant promotion effect on low-income households.Secondly,the increase of house price has a significant effect on the promotion of consumption upgrade for homeless households and households with more than two houses.However,for families with only one home,house mainly plays its consumption attribute and investment attributes are not significant.Thus,the promotion effect of house price is weak and insignificant for them.