Influence of Urban-Rural Income Gap on China's Economic Growth Empirical Analysis Based on Consumption Demand and Physical Capital Formation

Using panal data of 1978-2010,this paper implements unit roots test,cointegration as well as ECM model to analyze urban-rural income gap's impact on China's economic growth with view of consumption demand and physical capital formation.The conclusion is:(1) Urban-rural income gap and economic growth have a longtime equilibrium,but urban-rural income gap will inhibit economic growth in a short term;(2) Consumption demand has a promoting effect on economic growth,but marginal propensity to consume decrease progressively caused by urban-rural income gap reduce this effect;(3) Physical capital has a promoting effect on economic growth,the effect is strengthened by urban-rural income gap in a long term,but there's no significant effect in short term.