The Connection Of Uncertainty Within The Transformation Of Economic Institution In China And Propensity To Consume

In recent years, the fluctuation of MPC in China is wide, and APC continued to decline as well, which ran far away from the related exposition of Keynes. After analyzing the propensity to consume and the economy institution altogether in our country, we know there is a close connection between them. China is undergoing the economic and political transformation. During this course, policy-makers who have limited reason enlarged the income-gap between the rich and the poor, detained the construction of social security system, kept high the expenditure on education and house-purchase, made the consumption environment full of alteration. Besides, as results of the transformation, the pressure of unemployment increased rapidly, the expenses of medical treatment grow sharply, so the uncertainty of consumers' expectations rose. Thus accompanying the changes of economic institution, the factor of uncertainty influenced the consumers' decisions in a high degree, which thereby varied MPC and APC in China. Based on this idea, from aspects of both theory and verification, by means of analyzing the uncertainty of consumers' expectation which played a key role in propensity to consume, this article is trying to prove that the factor of uncertainty should possess more important status in consumption theory in China during the period of transformation. Meanwhile, this thesis aims at explaining that in order to promote consumption and avoid the sharp alteration of economy propensity to consume, the reason and stability of macroeconomic policies should be remained.