China's Urban Residents' Consumption Of Excessive Sensitivity And Uncertainty Of The Empirical Analysis

Consumption, which is the largest contributor of the GDP, is the key factor of the troika of the growth of our economy. In the final consumption, the household consumption always plays the leading role, and its quantity and variety heavily influence the macro economy. Since the 1990s, with the development of our economy, the urban residents' income has always been rising. In accord with that, the expenditure of the urban residents' consumption rises as well. However, the rate of consumption increases is much slower than that of income, so propensity to consume declines and the consumption rate falls. Due to the sluggish consumer market, economic contraction and scant demand in China economy in 1990s became the principal contradiction in building up the harmonious socialist society. Strengthening the consuming capacity and enhancing the action of consumption in stimulating the economic growth should be the main macroeconomic policies. This thesis, in accord with the decline of the urban residents' propensity to consume and the consumption rate, discusses two key points, i.e. the consumption excessive sensitivity and consumption expenditure uncertainty in theoretical and empirical analysis, thus having both theoretical and practical meaning.At first, this thesis draws the conclusion from different perspective, the urban residents' disposable income keep on rising, but propensity to consume and the consumption rate falls; pattern of consumption changes greatly but the upgrading faces great difficulty. Then with basing on RE-PIH andλhypotheses, the author builds up four panel data models to check up the excessive consumption sensitivity of all the China urban classes, and of the East, Middle and West. The author also finds that after bringing in the proxy variable of uncertainty, the excessive sensitivity greatly shrinks. So we can say, the uncertainty of future expenditure heavily influences the excess sensitivity in consumption. Finally the author proposes some suggestion: we should adopt different measures to different residents; and speed up the reforming of relative policies, and further improve urban Social Security System in order to give the residents steady customer expenditure anticipation; and readjusting industrial and production structure to make hot consumption items to upgrade the customer structure, and so on. In addition, according to the innovation and limitations, the author makes some further suggestions.