| With the improvement of income levels in China, the number of assets owned by the residents also increased rapidly, which has become a decisive factor in constraining consumption. Consumption as an important part of macroeconomic activity has been drawn more and more attention to and "the12th Five Year Plan" announce clearly to found a long-term mechanism to expand domestic demand in the next five years. So making analysis for wealth effect of residents" assets will help China to expand domestic demand, maintain rapid economic growth and keep social harmony. It has important theoretical and practical value to China’s economic development and stability.The wealth effect was with little regard to the spatial effect of the economic activity in the past. The reality for China’s economic development is that all regions are of increasingly close economic ties and intensified regional imbalance. In view of the theory of consumption and economic phenomena in geography space associated with heterogeneity, we need to analyze wealth effect of Chinese residents" assets under the premise of space effect.Panel data of residents’ assets from2001to2010for provinces and cities in China was estimated for the first time with available statistics in this paper. And we drew the conclusions and got their policy implications from the analysis with spatial econometric method.It is found that the consumption in China generally appears to significant demonstration effect and the wealth effect of residential assets in the inter-regional will spill too. The results from the Spatial Panel Regression and Geographically Weighted Regression show that the consumption of a region depends not only on the local disposable income and their wealth, but also on the consumption in the surrounding areas. The disposable income of residents is of the most important factor for consumption in China. Meanwhile, the wealth effects appear significant but weak for whether the financial assets or physical assets. The disposable income and the financial assets show significant positive correlation with consumption while the increase in physical assets squeezed the consumption to some extent.In order to facilitate the wealth effects work effectively, it needs to speed up the reform of the income distribution, strengthen cooperation in the adjacent province and improve the social security mechanisms and capital markets. |
