A Study On Effects Of Financial Cycle On Household Consumption

Based on the theory of financial cycle,this dissertation deeply explores the impact of financial cycle on the consumption level and consumption structure of Chinese households.Firstly,it analyzes the influence mechanism of financial cycle on consumption level and consumption structure respectively;Secondly,the dynamic factor model(DFM)is used to measure and analyze the national and provincial financial cycle;Then,dynamic panel model and moderating effect model are used to empirically test and analyze the specific impact of financial cycle on consumption level,and consumption structure model and iterated linear least squares(ILLS)estimation are used to empirically test and analyze the specific impact of financial cycle on consumption structure.The results show that:(1)DFM is a more appropriate financial cycle measurement method.DFM measurement results show that China’s financial cycle is characterized by medium cycle,low frequency and large amplitude,and the peak of the financial cycle is closely related to the financial crisis.This is not only in line with the definition of the financial cycle,but also the measurement results match the typical facts of the financial market and the trend of economic fluctuations,indicating that using DFM to measure the financial cycle is more accurate and effective.In addition,there are differences in the fluctuations of financial cycles in various regions.The amplitude of financial cycle fluctuations in the eastern region is relatively smaller than that in the central and western regions.The turning points of peaks and valleys in the eastern region are relatively earlier than that in the central and western regions.The synchronization of financial cycle tracks in the eastern region is relatively greater than that in the central and western regions.It shows that there are differences in the response of regional financial markets to the impact of financial cycles,which may lead to regional heterogeneity in the impact of financial cycles on households’ consumption.(2)The financial cycle has a significant impact on consumption level.Consumption level changes in line with the financial cycle,but the financial cycle will also expand the income gap.The income gap negatively regulates the pro-financial cyclicality of consumption level and inhibits consumption expenditure,which may be an important reason for insufficient consumption in recent years.Consumption level changes in the same direction with the financial cycle,but in addition to the single factor restraining consumption expenditure,the income gap also inhibits the improvement of consumption level by negatively adjusting the pro-financial cyclicality of consumption level.The heterogeneity analysis shows that from the perspective of the national sample,the urban-rural operational income gap has the largest negative adjustment effect on the pro-financial cyclicality of consumption level,followed by the urban-rural property income gap;In terms of subregions,the negative adjustment effect of the urban-rural property and transfer income gap on the pro-financial cyclicality of consumption level in the eastern region is greater than that in the central and western regions,and the negative adjustment effect of the urban-rural wage and operational income gap on the pro-financial cyclicality of consumption level in the central region is greater than that in the eastern and western regions;From the perspective of income groups,the negative adjustment effect of income gap between upper-middle,middle and lower-middle income groups on the pro-financial cyclicality of consumption level is greater than that of other income groups,and the negative adjustment effect of income gap between these three groups in cities is greater than that in rural areas.(3)The financial cycle also has a significant impact on consumption structure.The urban households’ development consumption changes in line with the financial cycle,but the positive supply shock does not promote them to increase development consumption,but leads to increase survival consumption,crowding out the development consumption.It reflects that the effective supply of urban consumer goods may still remain in low-end products,and the mismatch between supply and demand has hindered the improvement of consumption structure,which may be an important reason for insufficient consumption in recent years.In addition,supply side price factors also significantly affect the consumption structure of urban households.The rise in the prices of urban developmental consumer goods and residential goods will reduce the share of developmental consumer expenditure.The rise in the prices of consumer goods complementary to developmental consumer demand and the decline in the prices of consumer goods substituting for developmental consumer demand will reduce the share of developmental consumer expenditure.Therefore,we should pay full attention to the impact of the financial cycle on the supply side.The innovations of this dissertation are: First,using DFM to better measure the financial cycle;Second,from the new perspective of the financial cycle,this dissertation comprehensively analyzes the specific impact of the financial cycle on Chinese households’ consumption level and consumption structure,providing new empirical evidence for exploring the reasons for insufficient consumption;Third,it introduces a new analytical method for the study of the influencing factors of consumption.Finally,it puts forward targeted policy recommendations to increase consumption expenditure and improve consumption structure.