How Important Are Wealth Effects on China's Consumer Spending?

Jie Chen, Feng Guo and Weitao Zhang

Chinese Economy, 2010, vol. 43, issue 2, 5-22

Abstract: This paper investigates the impact of disposable income and assets on consumer spending trends in China. By employing the vector error correction model on the national quarterly data, we demonstrate that the wealth effects arising from asset value changes are remarkable. There is only one long-run cointegrating relationship among income, consumption, and assets. The long-run consumption elasticity of assets is found to be around 0.51. In addition, evidence shows that assets will restore the equilibrium relationship in the long run when the system is disturbed by external shock. Variance decomposition analysis indicates that assets render a more lasting pronounced impact than income on consumption variations in China.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=FN8350R6Q1055740 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:chinec:v:43:y:2010:i:2:p:5-22

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MCES20

Access Statistics for this article

More articles in Chinese Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().