An Empirical Study Of Zhejiang Province Of The Consumption And Income

Since the introduction of reform and opening up policy, Zhejiang rural economy and society have changed a lot. Since 1985, income of rural residents has been second only to Shanghai, Beijing, ranked first in provinces and regions. Net income and consumption per capita on average have maintained a rapid growth, however, compared to investment and export demand, consumption demand was obviously insufficient. According to the second agricultural census data, the population in Zhejiang rural areas was 30,523,000, accounting for 61.3% of the province. Obviously the rural areas have a large consumption group, thus their consumption expansion will form lasting, huge drawing function to the entire economic development.This article took Zhejiang rural inhabitants as object of study, firstly reviewed the related economic theory, and then analyzed income and consumption features of rural residents, followed by the use of Chow tests on the structural stability of relationship between consumption and income, followed by the use of cointegration theory and error correction model (ECM) researching long-run equilibrium relationship and short-term dynamic adjustment of Zhejiang consumption and income of rural residents . Once again the use of multivariate statistical methods to establish canonical correlation model of Zhejiang rural income and consumption, use income variables to explain the variables in consumption expenditure, quantitatively determined the association degree between varibles of income and spending.Finally, according to the conclusions proposed policy recommendations to increase the income and expanded the consumption of rural residents.The main conclusions of this paper were as follows:1. Features of income and consumption. Zhejiang rural income grew fast, the income constitution multiplied, and at the national leading level, the income gap was widening. The level of consumption had improved steadily, Engel coefficient declined.Realized the leap from subsistence to a well-off, quality of life upgrading overall, and was entering a new stage of overall well-off.2. The relationship between consumption and income. (1) During the period of 1978 to 2008, the relationship between consumption and income of rural residents changed at 1992. (2) there was cointegration relationship between real annual net income and consumption expenditure of rural residents, that was the existence of long-term stability of the equilibrium relationship.and dynamic equilibrium mechanism also existed between income and consumption, consumers adjusted their consumption so as to progressively close to steady state according to income changes and deviation from the steady-state level of the past.(3)The marginal consumption propensity distinguished a lot between the two stages, long-run marginal consumption propensity was higher in the first phase, while the short-term marginal consumption propensit was significantly lower in the first phase. This reflected, after 1992, the volatility of income had a great impact on consumption.3. Relationship between consumption constituents and revenue constituents. (1) The canonical correlation analysis showed that the food and living expenses had most close relation with the family business income and wages income. This showed that rural residents spent their main sources of income on food consumption and living expenses. This was partially because the structural optimization of food consumption and upgrading of the housing. (2) Household appliances and services spending, health care, cultural and educational entertainment goods had close relationship with income from family business and wages income, this indicated that farmers'income from family business and labor firstly was to meet the food and living expenses, secondly was for the purchase of household appliances and services, and pay for medical care costs.According to the conclusions, the relevant policy recommendations were as follows:1. Raise the wages income and income from household business.2. Narrow income gap.3. Increase financial support, complete system to solve the farmers'worry.4. Increase investment in rural infrastructure, and further improve the living environment for consumption.