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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front Econ Chin    2010, Vol. 5 Issue (4) : 622-639    https://doi.org/10.1007/s11459-010-0116-y
research-article |
Capital Liquidity and Residents’ Consumption Decision: An Asymmetry Analysis of Economic Prosperity
Xuanhua Xu1(), Bin Pan2()
1. School of Business, Central South University, Changsha 410083, China; 2. School of Business, Xiangtan University, Xiangtan 411105, China
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Abstract

Among the current literatures that discuss the influence exerted on residents’ consumption behavior by capital liquidity, some often independently decide the demarcation point of the liquidity restriction that affects residents’ consumption behavior, without taking into account when the economy is flourishing whether residents will be influenced by the restriction of the liquidity that their consumption behaviors can not be fully carried out. We introduce a threshold model which varies according to the actual GDP and other financial indicators (money supply, average stock index and balance of bank loans) to discuss residents’ consumption behavior in China under different economic states. The empirical results show that when the economy flourishes or resuscitates, residents’ income of the same period have not notable influence on their consumption, which suggests that residents’ consumption behavior does not considerably change according to the fluctuation of the current income, but conforms with the constant income-life cycle hypothesis. Moreover, two estimated values 0.7504 and 0.8597, as economic boom measures, all fall in the boom stable stage—basically consists with the early-warning index of the macro-economy boom issued by National Bureau of Statistics of China. It shows that the macro-economic boom is not notablely influenced by capital liquidity, so is residents’ consumption behavior.

Keywords residents consumption behavior      capital liquidity      threshold model     
Corresponding Authors: Xuanhua Xu,Email:xuxh@mail.csu.edu.cn; Bin Pan,Email:panbin109@163.com   
Issue Date: 05 December 2010
 Cite this article:   
Xuanhua Xu,Bin Pan. Capital Liquidity and Residents’ Consumption Decision: An Asymmetry Analysis of Economic Prosperity[J]. Front Econ Chin, 2010, 5(4): 622-639.
 URL:  
http://academic.hep.com.cn/fec/EN/10.1007/s11459-010-0116-y
http://academic.hep.com.cn/fec/EN/Y2010/V5/I4/622
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