Capital Liquidity and Residents’ Consumption Decision: An Asymmetry Analysis of Economic Prosperity

Xuanhua Xu () and Bin Pan ()
Additional contact information
Xuanhua Xu: School of Business, Central South University, Changsha 410083, China
Bin Pan: School of Business, Xiangtan University, Xiangtan 411105, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2010, vol. 5, issue 4, 622-639

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 (search for similar items in EconPapers)
JEL-codes: E37 O16 P24 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0116-y (application/pdf)

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:fec:journl:v:5:y:2010:i:4:p:622-639

Access Statistics for this article

Frontiers of Economics in China-Selected Publications from Chinese Universities is currently edited by LONG Jie

More articles in Frontiers of Economics in China-Selected Publications from Chinese Universities from Higher Education Press
Bibliographic data for series maintained by Frank H. Liu ().