The Effect of Government Expenditure on Livelihood on Rural Resident's Consumption Demand

In this paper, by using China’s provincial panel data from 1978 to 2011, we have done empirical analysis on the dynamic effect of government expenditure on livelihood on rural resident consumption demand. The result shows that government expenditure on livelihood has a positive correlation with rural resident consumption demand. But the effects of policy are different between the three regions. The reason is that the rural residents have precautionary motives in China. And the uncertainty of expenditure has greater negative effect on central and west than east residents.