Chinese Household Asset Allocation and Heterogeneous Agents Consumption Behavior
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| Title | Chinese Household Asset Allocation and Heterogeneous Agents Consumption Behavior
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| Author | Zang Xuheng and Zhang Xin |
| Organization | School of Economics,Shandong University |
| Email | xhzang@sdu.edu.cn；zx808618@126.com |
| Key Words | Asset Liquidity; Marginal Propensity to Consume; Precautionary Savings; Heterogeneous Agents |
| Abstract | In this paper, we apply the empirical methodology of two-asset model to identify the heterogeneous agents and study the effect of household asset structure on the marginal propensity to consume out of transitory income changes and precautionary savings empirically based on CFPS data. We find that compared with those with sufficient liquid assets, the consumers with liquidity constraint have a higher marginal propensity to consume out of transitory income shocks, which provides one explanation to consumption smoothing from the standpoint of asset liquidity and transaction cost. Moreover, compared with the house owners, the consumer without housing assets face higher uncertainty, which has greater impact on household wealth accumulation. It increases the degree of liquidity constraint and then the marginal propensity to consume out of temporary income shocks. From the perspective of household assets liquidity and house asset dual features, this paper explains the phenomenon of the coexistence of "high wealth level" and "consumption suppression" in the current Chinese households. |
| Serial Number | WP1262 |
| Time | 2018-02-05 |
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