A Synthetic Analysis of the Link Between Institutional Transformation and Residents' Consumption——An Empirical Study into the Consumption Behavior of Shanxi Urban Residents

Taking advantage of the survey on the monthly income and expenditure of Shanxi urban residents from 1990 to 2000 and the modern economic computation, the study is made on the impact of economic institution transformation over the consumption behavior of the urban residents. This empirical study shows that under the impact of the institutional transformation, great changes have taken place in the consumption behavior of Shanxi urban residents. These changes are evidenced specifically in: (1) the long-term equilibrium ratio of consumption and income, i.e., the long-run marginal consumption propensity to consume, is clearly lowered; (2) the fluctuation in the consumption and income of the previous time period is no longer notably influential to the present, which shows more forward looking on the part of the consumers; (3) consumption is much less sensitive to the concurrent income. The proportion of cross time-period consumption is markedly increased and people's consumption behavior is more rational; (4) uncertainty in income has become an explanatory factor to the consumption increase restraint.