Empirical Analysis Of Precautionary Savings Motive Of Shanghai Urban Consumer Behavior

Consumption and saving theory have been popular in academic research. Introduced in the rational anticipated thoughts, Precautionary saving theory adds uncertainty analysis into the framework and analyzes the consumers' optimal intertemporal choice. It is the important development of life cycle and permanent income model of consumption.Since the reformation, Chinese government constituted and implemented a series of policies on the basis of the domestic situation and international position. These made economy quickly develop and the comprehensive national strength also had the bigger exaltation, our country got brilliant and obvious achievements in many aspects. The level of the residents' savings also kept persistent and fast increase which became the phenomenon of high savings from the reformation. However, the high savings of residents not only lowered the consumptive level, kept the quality of people' s life on a low level and also bring out insufficient domestic demand in China' s economic development. Aiming at this kind of problem, partial scholars already analyzed the reasons from the angle of the precautionary saving currently, which were based on the theories about the precautionary saving in western country and the increases of the future incertitude of the residents that were brought about by a series of reformatory measures. Most studies found that precautionary saving theory can explain low consumption but high savings phenomenon very well. Many scholars also studied consumers' behavior under the liquidity constraints which comes from China's economic reformation. Most of these studies were about the national residents' consumption behavior, rarely on the residents' consumption behavior in Shanghai city. Still these studies mainly focus on the income uncertainty of consumer behavior, ignored the expenditure uncertainty of consumer behavior.Shanghai is China' s economic and financial center and the leader of economic development in the Yangtze River delta region, where the high saving but low consumption phenomenon also exits. It is very important for the economy of shanghai even China to develop steadily and healthily, that study Shanghai urban residents' consumption behavior. The research of this paper is based on the theories of the precautionary savings. Considering the high urbanization of Shanghai, We attempt to find the influence income uncertainty and expenditure uncertainty brings to shanghai residents respectively. Firstly, the author reviews precautionary saving research and introduces the latest development. Then , analyzes the characteristics of Shanghai urban residents' consumption behavior during Shanghai urban development and the existence of income and expenditure uncertainty. Finally, collecting and processing the data of disposable income and expenditure and consumer price index from 1978 to 2007. Deduced the ECM models from linear consumption function, applying EVIEWS5.0 to find the precautionary motive significantly exists. The result also showed that the effect of expenditure uncertainty of Shanghai urban residents' consumption behavior is more significant than income uncertainty. The fourth chapter and the fifth chapter are the important chapters in this paper.To reduce precautionary motive and improve the consumption level of Shanghai urban residents', the government can the following three aspects:Firstly, perfect the income distribution system. Only by improving the per capita disposable income can we increase consumption level. Secondly, complete the reform as soon as possible and perfect social security system to reduce the consumption expenditure uncertainty. Thirdly, optimize consumer structure further to promote consumption growth and improve consumption rate of Shanghai urban residents.