Study On The Co-integration Relationship Between The Income And Consumption Of Urban Residents

Since the reform and opening up, the standard of living of urban residents in China has undergone enormous changes. Consumption is an important part of life for the consumer study called television news burgeons. Economists from different periods in different aspects of consumer research conducted in-depth, the creation of a variety of doctrines such as the absolute income hypothesis, relative income hypothesis, permanent income hypothesis, life cycle hypothesis and so on. The theory to our lives played a guiding role, but to the current situation, our country apparent consumption shortage. This form is not conducive to long-term development of our economy, so to expand domestic demand is the basic point of economic development. In the many factors constraining consumption and income play a decisive role, not only affects the overall life of urban residents'consumption level, but also directly related to the rationalization of the consumption structure of urban residents.This paper takes the income and consumption of urban residents as the research object combining theoretical analysis and practical method and discusses the co integration relations of income and consumption of urban residents in China. The actual model uses the date from1980 to 2009 of urban residents in China. Its main idea borrows from domestic and foreign scholars on research achievement, using the ADF unit root test, co integration test EG, error correction model ECM, Grand Jason Granger causality test and other measures of economic theory. Further 30 sets of data are discussed by the overall and subsection and we compares the research as a whole and subsection research differences. The results show that the income and consumption of urban residents exist a long-term equilibrium and short-term dynamic co integration. Segmentation study deeply reflects income and consumption close relations in different stages of period of China since the reform and opening. Then we found that there is large space to enlarge urban consumption, so we put forward some suggestions as to raise the income level of low-income earners, adjust the civil servants and personnel salary, perfect the institution wage policy, to establish and perfect social security system and the consumer credit system, and to use the tax adjusting income distribution, etc.