A Research on the Relationship between Urban Households’ Income and Expenditure in Hainan

Junmei Zhou, Defei Zhang

Department of Mathematics, Honghe University, Mengzi, China.
School of Mathematics and Statistics, Hainan Normal University, Haikou, China.

DOI: 10.4236/ti.2013.41B003                

Abstract

APC (Average Propensity to Consume) refers to the ratio of dividing consumption by income during the same period, which reflects the percentage of consumption in current residents’ income. This paper analyses the APC and builds up models about the dynamic relationships between urban residents’ income and consumption expenditure in Hainan, with panel data model, choosing per capita annual disposable income as explanatory variable, per capita living annual ex-penditure as response variable, and data from the year of 2004 to 2010. The research shows that different income levels bring different impacts on consumption, and provides theories of adjusting the consumption structure, expanding do-mestic demand and promoting the economy development.

Keywords

Panel Data Model; Income; Consumption; Urban Resident

Conflicts of Interest

The authors declare no conflicts of interest.

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