A positive study of China's residents consumption function and factors

This paper gets an error correction model on China's resident consumption and income by means of the cointegration analysis. The findings are as follows: 1) In a short term, there will be a negative correlation between demand and income in China, and town people's short-term marginal propensity to consume is weaker than the long-term's; 2) The case in the countryside is on the contrary. The influence of interest rate and town Gini coefficient on the town people's consumption is insignificant. The influence of interest rate and rural Engel coefficient on rural people's consumption is insignificant. At last, some suggestions are given based on the findings.