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Excess sensitivity of consumption: An empirical analysis of urban residents in China

Shengliang Deng (Faculty of Business, Brock University, St Catharines, Canada)
Xiaotong Jin (Business School, Jilin University, Jilin Province, Peoples' Republic of China)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 26 September 2008




Until now, traditional western consumption theories have not been able to adequately explain the consumption behavior of Chinese residents in the economic transitional period. Based on annual data from 1986 to 2004, the purpose of this paper is to examine the excess sensitivity of consumption through a variable parameter model.


A regression model was used to analyse annual consumption data from 1986 to 2004 in China.


The analysis demonstrates excess sensitivity characteristic in Chinese residents' consumption in the economic transitional period.

Research limitations/implications

The paper concludes that in order to make the demand stimulation policy in China more effective, it is necessary to take a series of measures to correct the excess sensitivity of consumption, so as to establish a healthy cycle of national economy. The paper has only explained excess sensitivity of Chinese residents' consumption from the point of view of economics. While consumption is an economic problem as well as a social problem, those factors beyond economics should not be excluded from the analysis.


This paper differs from former studies in that previous scholars failed to take into consideration the special economic characteristics in China's transitional economy. The variable parameter model this paper employed takes full consideration of such unique factors as economic expectations and systems changes during the transitional period so as to better explain Chinese people's consumption behavior and provide a new perspective to make government policies stimulate domestic demand more effectively.



Deng, S. and Jin, X. (2008), "Excess sensitivity of consumption: An empirical analysis of urban residents in China", International Journal of Emerging Markets, Vol. 3 No. 4, pp. 378-389.



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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