The Research On How Uncertainty Effects Chinese Urban Residents' Consumption And Portfolio Choice

Consumption and portfolio choice is always a hot issue in the economics and finance research field. In recent years, more and more domestic and foreign researches focused on the problems of china such as insufficient consumption demand and single investment structure. Uncertainty as a basic feature of the transformation economy is bound to have an important impact on residents'consumption and portfolio choice. Therefore, it has an important theoretical and practical significance to study how the uncertainty affected urban residents'consumption and portfolio choice systematically and thoroughly.Mass of domestic literature had discussed the influence of uncertainty on the household's consumption and portfolio choice. A common method in these researches was regarding saving as an asset with constant return rate, which resulted in only considering the uncertainty of labor income in the household's consumption behavior research, and only considering the uncertainty of investment return in the household's portfolio behavior research. This paper combines the uncertainty of labor income and investment return, and analyzes their joint influence on the household's consumption and portfolio behavior based on the consumption-portfolio optimization model which takes the risk of labor income into account.This paper's studying path is: First, the paper gives a review of the theoretical and empirical researches on residents'consumption and portfolio choice home and abroad, laying a theoretical foundation and research direction for the following chapters. Then, analyzed how uncertainty affected consumption and portfolio choice behaviors of Chinese urban people qualitatively. Next, the paper established a dynamic model of optimal portfolio rules with labor income risk and a dynamic model of optimal consumption with investment income risk which provide the basis for following quantitative analysis. And then, the paper studied how uncertainty and other factors effect urban residents'consumption and portfolio behaviors quantitatively. Last, the paper gives out some policy suggestion of how to stimulate the pattern of residents'consumption and portfolio choice according to the result.The results shows that during the economy transformation, Uncertainty has a dominant effect on urban residents'consumption and portfolio choice, which is an important reason for insufficient consumption demand and single investment structure of residents of our country, but different components have different effect levels. Otherwise, residents'income and its growth rate, the difference of residence's income level also have an important effect on urban residents'consumption and portfolio choice.According to the above results, this paper gives out some policy suggestion about how to influence the patterns of residents'consumption and portfolio choice, which includes: steadily raising the residence's income and its growth rate, especially labor income and its growth rate; decreasing residents'uncertainty, especially labor income risk; improving the distribution system of income, reducing the difference of residence's income level and so on.The theoretical value of this paper is educe a dynamic model of optimal consumption with investment income risk, which introduces portfolio into the model by loosening the assumption of conventional consumption theories that assumed the rate of investment return is fixed. Meanwhile, by introducing the labor income and it's'risk into the conventional theoretical model of portfolio selection, this paper sets up a model of optimal portfolio rules with risk of labor income, to promote development of residential consumption and portfolio choice theory. The practical applied value is that this paper studies the influences of uncertainty and other factors on urban residents'consumption and portfolio choice, deeply and systematically, from qualitative and quantitative viewpoints. Conclusion of this research not only can help residents better arrange their consumption and portfolio choice, but to improve constitution and implement of macro-economic policy, and its effectiveness.