Study On The Influence Of Urban Households’ Consumption Composition On Economic Growth In Henan Province

After the implementation of the reform and open policy, China’s economy has developed rapidly. Investment and export trade are important engines for economic growth. Consumption has not played its enormous potential. Currently in post-crisis era, investment and export have faced obstructions. Consumption as the endogenous power has become a focus of our attention and will maintain rapidly economic development.Consumption composition is a core component of consumption,reflecting the level of consumption, consumer content and the quality of consumption. Exploring the various factors affecting the consumption composition has a crucial role to meet the growing consumer demand for change, the same as revealing developments and structure of total consumptions. In recent years, the level of income of urban residents and the quality of life in Henan province have different degrees of improvement. Residents’ demands for all kinds of consumer goods are also changing, which have changed from basic needs to high level of demands. The propensities to consume of consumers in different groups of income are certainly different. These situations have a significant effect on the economic development. So the analysis between the consumption composition and economic growth is very important.A systematic study is made to analyze the consumption composition of urban households in Henan Province from two parts. By using the comparative analysis method, the first part has studied the movement between economic development and urban households’ consumption from a different perspective in Henan province. The second part is an analysis of the relationship between them by the quantitative analysis deeply. First of all, from the perspective of the total, using the co-integration test,the granger causality test, the impulse response function and the variance decomposition proves that there is a long-term equilibrium relationship between urban households’ consumption and economic growth through the establishment of the VAR model. The results show that economic growth and urbanhouseholds’ consumption are closely related in the short and long term. There is a lag correlation. From the research on marginal consumption propensity, the consumption of urban households in Henan Province has focused on food,transportation and communications; food, recreation, education, clothing and housing are emphases from the research on basic living need; from the research on demand elasticity, more people consume high-level transportation and communications after the basic needs of all types of consumer goods, the consumer demand of transportation and communications is mainly affected by changes of its price. Then by using gray correlation analysis to sort various types of consumption expenditure, the results show a strong degree of recreation, education, cultural services, transportation, communications, residence and economic growth. On the basis of empirical research, the paper provides proposals for the development of urban households’ consumption composition in Henan Province.