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Excess sensitivity of consumption An empirical analysis of urban residents in China

Excess sensitivity of consumption An empirical analysis of urban residents in China Purpose – Until now, traditional western consumption theories have not been able to adequately explain the consumption behavior of Chinese residents in the economic transitional period. Based on annual data from 1986 to 2004, the purpose of this paper is to examine the excess sensitivity of consumption through a variable parameter model. Design/methodology/approach – A regression model was used to analyse annual consumption data from 1986 to 2004 in China. Findings – The analysis demonstrates excess sensitivity characteristic in Chinese residents' consumption in the economic transitional period. Research limitations/implications – The paper concludes that in order to make the demand stimulation policy in China more effective, it is necessary to take a series of measures to correct the excess sensitivity of consumption, so as to establish a healthy cycle of national economy. The paper has only explained excess sensitivity of Chinese residents' consumption from the point of view of economics. While consumption is an economic problem as well as a social problem, those factors beyond economics should not be excluded from the analysis. Originality/value – This paper differs from former studies in that previous scholars failed to take into consideration the special economic characteristics in China's transitional economy. The variable parameter model this paper employed takes full consideration of such unique factors as economic expectations and systems changes during the transitional period so as to better explain Chinese people's consumption behavior and provide a new perspective to make government policies stimulate domestic demand more effectively. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Emerging Markets Emerald Publishing

Excess sensitivity of consumption An empirical analysis of urban residents in China

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1746-8809
DOI
10.1108/17468800810906084
Publisher site
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Abstract

Purpose – Until now, traditional western consumption theories have not been able to adequately explain the consumption behavior of Chinese residents in the economic transitional period. Based on annual data from 1986 to 2004, the purpose of this paper is to examine the excess sensitivity of consumption through a variable parameter model. Design/methodology/approach – A regression model was used to analyse annual consumption data from 1986 to 2004 in China. Findings – The analysis demonstrates excess sensitivity characteristic in Chinese residents' consumption in the economic transitional period. Research limitations/implications – The paper concludes that in order to make the demand stimulation policy in China more effective, it is necessary to take a series of measures to correct the excess sensitivity of consumption, so as to establish a healthy cycle of national economy. The paper has only explained excess sensitivity of Chinese residents' consumption from the point of view of economics. While consumption is an economic problem as well as a social problem, those factors beyond economics should not be excluded from the analysis. Originality/value – This paper differs from former studies in that previous scholars failed to take into consideration the special economic characteristics in China's transitional economy. The variable parameter model this paper employed takes full consideration of such unique factors as economic expectations and systems changes during the transitional period so as to better explain Chinese people's consumption behavior and provide a new perspective to make government policies stimulate domestic demand more effectively.

Journal

International Journal of Emerging Markets – Emerald Publishing

Published: Sep 26, 2008

Keywords: Consumer behaviour; Uncertainty management; Expectation; China; Economic change; Transition management

References

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