Effects Of Uncertain Income And Consume To Consume Of Chinese Rural Residents

As Chinese economic reform, the problem that economic growth overly depends on investment and export is particularly prominent. Especially in the21st century, the contribution to GDP growth of consumption is always at a low level. Underconsumption has become a key factor which restricting Chinese economic growth. Seventeenth CPC National Congress clearly stated:"transforming economic growth relies principally on the investment and exports to rely harmonized on consumption, investment and exports", expanding domestic demand has increased to the national strategic level. The current consumption of Chinese urban residents upgrades slowly, and it has small space to improve in a long term. However the rural consumer market has great potential for development. Increasing rural residents’consumption has become the work focus of the party and the government. Although the rural consumer market has great potential for development and the State Council also attaches great importance to increase the income level of rural residents, the reality is not very satisfactory. Comparing to urban residents, rural residents is still in a weak position in the consumer market. The problem of underconsumption of rural residents has seriously affected the CPC Central Committee and State Council’s decision to expand domestic demand, so we have to carry out a depth study about the underconsumption of rural residents.Analysis of the deeper reason of underconsumption of rural residents, this paper considers the underconsumption of rural residents is not just a simple personal decision-making behavior, but also subject to the impact of specific institutional environments and resource constraints. Through this analysis we found that rural residents when making consumption decisions facing two outstanding issues:Income uncertainty and consumption uncertainty.This article regards income uncertainty and consumption uncertainty as a breakthrough to research Chinese rural residents’ consumption decisions and behavior under income uncertainty and consumption uncertainty.Contents of this paper consist of three parts:First, study the two main outstanding issues of consumer decision-making when facing rural residents, and make specific measure about the uncertainty of income and consumption.Second, research income uncertainty, the long-term equilibrium relationship between income and consumption of Chinese rural residents under conditions of income uncertainty and consumption uncertainty, then based on this analysis to research the adjuctment mechanism of Chinese rural residents’ current consumption.Third, construct a measure of income uncertainty and consumption uncertainty quantitative indicators to analyze the impact of income uncertainty and consumption uncertainty on the growth rate of Chinese rural residents’ consumption.Then make specific measure of the marginal impact of consumption.The structure of this paper:Chapter Ⅰ is an introduction. It presents the target question and introduces the related information, including the background and meaning of the study, research contents and methods, advantages and disadvantages.Chapter Ⅱ is an overview. It mainly summarize and review the progress and the least research results of consumption theory at home and abroad, including the related problems on consumption and income, the uncertainty of consumption and income, the measurement technique about consumption.Chapter Ⅲ is the theoretical basis. First, in order to find out the two major problems that Chinese rural residents meet when they make decisions on consumption:Income uncertainty and Consumption uncertainty, it shows the current situation of Chinese rural residents’consumption and displays the analysis on the situation. Second, by thoroughly studying of both income uncertainty and consumption uncertainty, it founds out that both high operation cost and greatly influenced by external factors, take climate for example; Chinese rural residents’ low education and lack of professional skills; the lack of job security and the economic restructuring; the unsound social security system of Chinese rural residents and rural residents’unconsciousness of participating in the social security:lead to the uncertainty of Chinese rural residents’income. Meanwhile, rural residents housing, children’s education, medical expenses etc. occupy a great part in the rural residents’ family expenditure and they are able to be estimated. Worse still, scarcity of both education and medical resource results in price rising of education and medical care. All of these factors contribute to the increase of rural residents saving for the sake of unexpected consumption. Finally, provide the theoretical support for this paper by combination of related consumption theory and existing studying results.Chapter IV is the analysis, including basic assumptions, mathematical model establishment and applications, and algorithms for the estimation of mathematical model. First, in order to examine the basic assumptions in empirical research, details of the basic assumptions are given. Second, mathematical model of the target problem is introduced. Third, associated with the characteristics of the mathematical model,the algorithms for the estimation of mathematical model and related statistical tests are elaborated. Dynamic panel data models are established in this paper. Estimation techniques of extented two-step GMM are adopted.Chapter V and VI are the empirical analysis of this article.Chapter V mainly study the long-run equilibrium relationship between the income and consumption of rural residents of China under the conditions of revenue uncertainty and consumption uncertainty, and accordingly estimates the potential consumption level of rural residents in China as well as the actual level of consumption caused by the income uncertainty and consumption uncertainty, then analysis the adjust mode to the current consumption of Chinese rural residents. The research shows that the consumer uncertainty and income uncertainty are two important reasons for inadequate consumption of rural residents in China.Chapter VI mainly studies the impact effect of income uncertainty and consumption uncertainty to the Chinese consumer consumption of rural residents. By constructing the quantitative indexes of measuring the income uncertainty and the consumption uncertainty, we use model to analysis the impact on the consumption of rural residents by the uncertainty of revenue and consumption.Chapter VII is the section of conclusion and policy recommendations of this article.The main innovation of this paper has the following five points:First, this paper has analyzed the lack of Chinese rural residents’ consumption deeply and systematically, and has analyzed the reason of the income uncertainty and consumption uncertainty which impact the decision-making behavior of household consumption of rural residents. The analysis of these two outstanding issues is a systematic, detailed, meticulous research, which is the lack of the related Institute.Second, the research about the influence of income uncertainty and consumption uncertainty of rural residents’household consumption in China is just stayed in the verification of whether inhibited Chinese rural residents’ consumption. This paper creatively introduces income adaptive mechanisms and consumer expectations partial adjustment mechanism.Third, more importantly, the paper also analyze regulatory mechanisms to the income uncertainty and consumer uncertainty which inhibits Chinese rural residents consumption and come to result.The adjustment mechanism is through the influence of consumption to current consumption to achieve, which is due to the expected revenue adaptive adjustment mode and adjust the pattern of consumption of locally formed. However more deep-seated reason is the Chinese rural residents’ income which is not adaptive expectation mode of income not yet in this regard.Fourth, the article also takes a specific measure in income uncertainty and consumer uncertainty, and on this basis, the paper model it.Income uncertainty and consumer uncertainty on Chinese rural residents’ consumption has a significant inhibitory effect, and the income derived uncertainty and uncertainty about consumer spending growth in Chinese rural residents marginal inhibition, which is another innovation of this article place.Fifth, the paper uses cross-sectional and time point to consider the heterogeneity of dynamic panel data model, in order to study the relationship between consumption and income of rural residents, there is no research in this area.