Regional Differences,Government Expenditure on Livelihood and Resident Consumption Demand:Analysis of Theory and Evidence

Based on the optimum consumption behavior theory and the consumption characteristics of Chinese residents,the paper introduces government expenditure on livelihood and the consumption function.The paper also makes an empirical test by using the panel data of China from 1997 to 2009.The results are as follows,government expenditure on livelihood has positive impact on resident consumption;the impact of government expenditure on livelihood on resident consumption in rural areas is greater than the one in urban areas;the impact of government expenditure on livelihood on rural resident consumption in Midwest areas is greater than the one in eastern areas;the impact of income on resident consumption is greater than the one of government expenditure on livelihood all of fields.So government expenditure is to be directed toward rural residents,especially the ones in the rural areas of the Midwest,thus promoting stable growth of resident consumption.