Social networks, shocks, and household consumption in China

Yang Yang, Jialing Jiang and Zhichao Yin

Economic Analysis and Policy, 2021, vol. 71, issue C, 111-122

Abstract: This paper provides new evidence on the effect of social networks on consumption using China Household Finance Survey panel data. Further, we examine the role social networks play in consumption when households face exogenous shocks. Heterogeneity analysis indicates that the positive impact of social networks on household consumption is greater in rural areas and for low-income groups. We also identify the mechanism of reducing precautionary savings as a channel. Moreover, social networks can alleviate the negative impact of exogenous shocks on consumption and play an informal insurance role. These findings provide a wealth of insights relevant to policymaking.

Keywords: Social networks; Shocks; Household consumption (search for similar items in EconPapers)
JEL-codes: D12 D91 O12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:71:y:2021:i:c:p:111-122

DOI: 10.1016/j.eap.2021.04.008

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