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The Constructor and Test of Urban and Rural Residents Consumption Function in Our Country during the Economy Transitional Period

Author: WeiNing
Tutor: WuKaiChao；ShiJiGang
School: Southwestern University of Finance and Economics
Course: Western Economics
Keywords: Consumption Function urban residents rural residents absolute income sustainable income
CLC: F126
Type: Master's thesis
Year: 2008
Downloads: 133
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Abstract


Consumption Function is of great significance in the macroeconomic analysis. Along with the continuous deepening of the reform of China’s economic system, on the one hand, with the steady economic growth, people’s income has continued to rise. On the other hand, the consumption scale has slowed down.This paper recalls the consumer behavior assumption in the main western Consumption Function Theory and the corresponding forms of expression, and makes comparative analysis of the differences between them. Then takes the Chinese domestic system into consideration, analyzes the Chinese consumer behavior on the basis of domestic and foreign scholars’research results, and establishes a Chinese Consumption Function Model.Based on the existing research, this paper studies the following questions: First, the theories of Western consumption are based on the reality of the West to a great extent. Can these theories and models be consistent with China’s reality, and to what extent can they be used to explain the reality of our country? This has not yet been tested. We will refer to Keynes’s absolute income theory and Friedman’s lasting income theory to establish model for China’s current economic situation. Second, the weakness of domestic demand become the common topic both theoretically and socially, consumption of urban and rural residents have different behavioral characteristics, the paper will give its comparative analysis, we hopes to find some reasonable explanation for China’s current economic situation.In this paper, the author has the following guesses:First, China’s economy system’s change from the planned economy to market economy causes the relative change of urban and rural residents’consumer behavior.Second, since the period of China’s economic transformation, income gap between urban and rural residents has intensified. This causes enormous difference between urban and rural residents’consumer behavior. Third, the Consumption Function Theory in the West has discussed the long-term trend of marginal consumption, but the long-term concept was too vague. In this paper, the author believes that this long-term impact period can be quantified.There are totally six chapters in this paper. Apart from the part introduction and the last part to give some recommendations and conclusions, the core is of part II, III, IV, and part V.Chapter II introduces the main consumer Theory and constructs China’s Consumption Function.Chapter III tests the urban residents’short-term consumption function.Chapter IV tests the rural residents’short-term consumption function. The test result that comes from Eviews is different from the rural residents’.Chapter V tests the urban and rural residents’long-term consumption function. This chapter is based on the model of Friedman’s sustainable income theory, and quantifies the "long-term" concept.When analyzing the consumer behavior, the paper is based on the real situations the rural residents and urban residents faced. And gains support through the quantitative and qualitative analysis. In the end, we give China’s current economic situation some reasonable explanation, and propose measures to expand domestic consumption.

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CLC: > Economic > The world economic profiles,economic history,economic geography > China's economy > People's living conditions
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