Empirical Study Of Precautionary Savings Motive Factors On Chinese Rural Residents

One economic feature of our country is low consumption rate and high saving rate, whereas is specially evident in the countryside。On one hand, average propensity to consume of rural residents is lower about 10% than that of urban residents。On the other hand, there presents a decline trend of APC of rural residents。Although our countryside has large consumption potential, the fact is that saving rate stands high, which is of important significance to derive deep into the reasons。Only when the reasons are found, can we formulate fiscal (or even monetary) policies to meet the need of a more healthy development of economic。Consider that the economic transitional period of our country, system of policies, laws or so is uncertain, and that under the conditions of larger and larger income gap and the imperfect institutional arrangements, rural residents are more likely to form uncertainty expectations。We use the precautionary saving theory to complete the empirical research on the factors that effect the high saving rate of rural residents。We define Precautionary saving as personal risk aversion of future uncertainty, such as in prevention of fluctuation of future income, a person would commit extra saving。First we will review the context of precautionary saving, then several typical models will be introduced。With reference to the typical models of the literatures and considering of our specific conditions, we derive euler equation from personal utility maximization problem under the CRRA utility function, then choose indexes that represent uncertainty。to continue empirical research, we choose 1993-2009 data and then calculate needed 1994-2009 data(lst-difference adjusted)in the first step, with eviews6.0 we obtain the estimation of VAR model, and then the impulse and the variance decomposition diagram。Direction, strength and length of time of impact that uncertainty forges in relative short-run can be seen in impulse diagram, and contribution rate can be got with variance decomposition diagram。In the second step, we get equilibrium relationship from the estimation of VECM model, or, from ECM model。Then comparison is taken between behaviors to draw the conclusion and policy advices。With empirical analysis, we draw the conclusion that in short run, when factors cause uncertainty arises, rural residents often overreact, cause extra saving。The reason is the imperfect institution under the dual structure that makes the lack of long-term mechanism of income growth and the inefficiency of social security system。To deal with the problem, we should continusely develop and perfect the system, only when this is done, can rural residents do more consumption, thus saving rate reduced。...