Xueqi Wang, Yanyun Zhao, Chao Fan

【Abstract】

With the rapid development of China’s economy, the consumption structure of urban and rural residents has changed significaptly. This paper conducts a dynamic panel analysis of the impact of consumption custom and population age structure on urban household consumption using Chinese provincial panel data during the period 2003-2013, which overcomes the “plus total fallacy” on product dimension in total consumption analysis. The results suggest that （1） Population age structure of urban household influence consumption structure significantly. In eight kinds of consumer expenditure, children have the largest demand for cultural and educational entertainment and the old have a large demand for living and medical care.（2） The consumption expenditure of urban residents in China has a strong habit formation. Income and consumers’ habit formation are the most two important factors influencing consumption structure. （3） In the background of increasing income, lowering real interest rate and controlling house price, urban residents’ consumption structure will keep stable with some changes and trends to enjoying type consumption.

【Keywords】

consumption custom, population age structure, consumption structure, GMM