Research On The Effect Of Household Debt On Consumer Expenditure

Since the new century,China’s economy has moved from a stage of rapid growth to a stage of high-quality development.Under the dual pressures of the urgent need to expand domestic demand and trade friction,the pulling effect of investment and export on the economy is fluctuatingly weakening,consumption has become the primary driving force of economic.Under the influence of the moderate consumption concept and the COVID-19 epidemic,the contribution of final consumption to economic growth in 2020 even showed a negative rate.During the crucial period of forming the development pattern of large domestic circulation and double domestic and international circulation,it became a key issue on how to guide consumption,improve consumption structure and stimulate domestic demand.At the same time,along with the development of inclusive finance,financial derivatives are increasingly abundant,the phenomenon of "gray rhinoceros" of China’s household debt has also been emerging.According to the statistics,Chinese household sector loan has climbed to 71.10 trillion yuan in 2021.Because some forms of debt,such as debt from relatives and friends,private debt can not be counted,the amount of debt in the household sector may be higher than the statistics.Under the background of declining consumption level and increasing debt,exploring the consumption effect of household debt,conducive to control the debt risk,effectively improve the consumption level,optimize consumption structure and stimulate domestic demand,this topic has theoretical significance and practical value.Based on a thorough study of relevant literature at home and abroad,this paper analyzed the relationship between household debt and household consumption from a theoretical perspective on the basis of the reality in China,discussed the mechanism,furthermore,the consumption effect of household debt was verified from various aspects in the empirical analysis,innovatively used threshold model to discuss the concept of early warning value of household debt.This paper selected the micro-data from China Family Panel Studies,by grouping regression,constructed threshold model and mediation model to explore and study,draw the following conclusion:,First,the tendency of Chinese households to borrow and consume is becoming more and more obvious,and moderate debt carried by households will have a boosting effect on household consumption levels.Therefore,moderate debt will have a wealth effect rather than a crowding-out effect on household consumption level.In terms of household consumption structure,consumption is divided into survive consumption,development and enjoyment consumption,the empirical results show that moderate debt has a more pronounced effect on the development and enjoyment consumption.So,moderate debt can further optimize the consumption structure;Second,both mortgage and financial debt have comparable wealth effects.But it is not the more houses a household owns,the more obvious the wealth effect is.The wealth effect of mortgage is only significant for households which has one house.At the same time,the wealth effect of household debt is greater for young familys,rural familys,and low-income familys;Third,according to the threshold model results,the optimal range of household debt value should be [0,10.8967].When this range is exceeded,the wealth effect will decrease;Fourth,through the mediation model,it is found that household debt will indirectly increase consumption through asset and income.According to the research conclusion,this paper puts forward some suggestions on how to improve the debt risk early warning system and guide households to be moderately indebted.In order to make some contributions in stabilizing debt pressure and stimulating household consumption.