An Empirical Study On The Consumption Of Urban Residents And Stock Market Returns In China Based On VAR Model

Since China's reform and opening up,the export-oriented economic model has led to rapid development in China.However,in recent years,due to the rapid change of international economic environment,external demand has been rapidly shrinking,and China's economic growth rate has begun to decline.Therefore,to stimulate the internal dynamics of economic development has become an important topic,and the concept of "internal circulation" has been proposed.Under the framework of "internal circulation," domestic consumption of urban and rural residents is an important part.At the same time,in the process of long-term economic development,the construction of a healthy and stable capital market is essential.A multi-level and healthy capital market is conducive to improving economic vitality and optimizing the allocation of economic resources.Therefore,it is of great significance to study the relationship between urban and rural residents' consumption and the stock market at this stage,which can provide certain reference value for the formulation of China's relevant policy.In this paper,the author finds that the research on consumption and stock market is mostly focused on the value of stock market and the "wealth effect" of residents'consumption,while the research on the impact of residents' consumption on stock market is still to be added.Therefore,this paper investigates the relationship between urban residents' consumption and the composite return of SSE index by using VAR model with data characteristics.On the basis of summing up the traditional consumption theory and the stock return forecasting theory,this paper explores the relationship between consumption and stock market return rate from the consumption theory of macroeconomics.This paper collects the annual data of urban residents' consumption,SSE index,and industrial value added in China from 1991 to 2019,and establishes a VAR model between urban residents' consumption level,consumption confidence,consumption ability,economic growth,and stock market return using the Eviews9.0 software.Residents' consumption to economic growth and stock market returns is of positive significance,and the effects of each facto on stock market returns are explored through impulse response and variance decomposition.The study shows that the consumption expenditure of urban residents can effectively promote the economic growth and improve the composite annual return rate of the SSE index.The increase in the number of unemployed people will significantly suppress the consumption level of urban residents,which will ultimately have a negative impact on economic growth and stock market returns.At the same time,the research on the income of urban residents finds that increasing the income of urban residents alone cannot steadily promote economic growth and stock market returns in the long run.To achieve this goal,it is necessary to increase urban residents'consumption willingness and consumption expenditure.To sum up,this paper points out that increasing urban residents' consumption level,consumption ability and consumer confidence can effectively improve economic development and stock market returns.