Analysis of China's Consumption Function - Contemporary Economics Series

Author: Zang Xuheng
Publisher:
Publish Date: 1994-12-01
Features: The methods adopted by the author in this book are primarily econometric methods, using linear regression model analysis and other related methods to verify various hypotheses and models. I am not familiar with these methods and have no right to comment, but I believe that limiting normative analysis alone is far from sufficient in the field of economics. Therefore, it is undoubtedly necessary to analytically draw on some mathematical analysis methods from Western economics to address the shortcomings of our existing research. Thus, although I know very little about this, I still greatly appreciate the author's attempt. If there are any shortcomings or defects in this regard, or even if it leads to some comments and objections, it would be very beneficial for research in this field.
In addition to the preface, the book can be summarized into three parts: Chapters 1 to 3 are theoretical analysis, Chapters 4 to 8 are empirical testing, and Chapter 9 is analytical conclusions and policy implications.
1. Theoretical Analysis Part. In the theoretical analysis part, first (Chapter 1), the theoretical framework for analyzing consumer behavior is summarized, primarily the neoclassical theoretical framework, comparing the similarities and differences in consumer behavior assumptions across various consumption function hypotheses. Then (Chapter 2), institutional factors are incorporated into the analytical framework to analyze the external environment faced by Chinese consumers and its impact on their consumption behavior, from which the external and internal settings of consumer behavior are derived based on the Chinese context, and these are compared with the settings of neoclassical theory and different consumption function theories to formulate hypotheses about Chinese consumer behavior. Throughout this process, the previously mentioned phased and urban-rural analysis methods are consistently applied. Finally (Chapter 3), based on the above analysis, the hypothesis of the Chinese consumption function is deduced, and a theoretical model of the phased and urban-rural consumption function is established. Additionally, the methods and viewpoints of several major Chinese consumption function discussions are analyzed and compared, with a focus on methodologically exploring three important issues in Chinese consumption function research.
2. Empirical Testing Part. In the empirical testing part, phased and urban-rural data are used to verify the hypotheses and models proposed in the theoretical analysis part. The five chapters of empirical testing can be summarized into two parts: The first part is Chapter 4, which is an empirical test of the hypotheses and models for the period before 1978. Based on the analysis in the theoretical part, before 1978, China's consumption function was relatively close to Keynes's absolute income hypothesis, with residents' current consumption primarily determined by current income. The basic premise for this view is that the fundamental constraint condition of residents' consumption behavior is a non-cross-sectional, current-period budget constraint. In addition to the current-period budget constraint, there are other factors that constrain residents' current consumption. Under the traditional system, the consumption behavior of urban residents was constrained by the rationing of consumer goods and shortages, so the rationing and shortages should be included as major variables affecting urban residents' consumption. On the other hand, the consumption behavior of rural residents was greatly influenced by the underdevelopment of the rural commodity economy and the semi-natural economic state of the overall rural economy, with a significant impact from material income and self-sufficient consumption. Additionally, the price ratio of industrial and agricultural products also affects the consumption behavior of rural residents. Therefore, material income, self-sufficient consumption, and the price ratio of industrial and agricultural products are the main variables, in addition to current monetary income, that explain rural residents' consumption. Chapter 4 uses total time series data from 1952 to 1977 on consumption, income, and assets of urban and rural residents, as well as cross-sectional data from household income and expenditure surveys of urban and rural residents, to verify the hypotheses and models. The second part is an empirical test of the hypotheses and models for the period after 1978. This part is the focus of the empirical testing section, including Chapters 5 to 8, a total of four chapters: Chapter 5 is a total time series data analysis, Chapter 6 is a household budget data analysis, Chapter 7 is an analysis of factors affecting residents' consumption, and Chapter 8 is an analysis of the impact of household asset choices and personal investment behavior on consumption. In these four chapters, the changes in the external environment of consumer behavior after 1978 are analyzed in detail, and the hypotheses and models proposed in this book for the period after 1978 are verified.
3. Analytical Conclusions and Policy Implications Part. Chapter 9 summarizes the main conclusions drawn from the analysis in the book and their policy implications. Additionally, it discusses issues that require further research.