Booming local economy a key to whetting rural consumption—Empirical study based on the decomposition of rural household income

Based on the decomposition of China’s rural household income,we made quantitative analyses of the factors affecting rural consumption by using co-integration and other econometric tools.By comparing the results with the ongoing economic stimulus package rolled out by the central government,we analyzed the effects of different policies on rural consumption.The empirical study and policy analysis show that:(1) income from household business operation, wages,and fiscal relief funds are the three main factors affecting rural household consumption;(2) the ongoing stimulus package,which includes both short-term measures like consumption subsidies and long-term policies aiming to increase rural household income and improve the rural consumption environment,are effective in promoting rural consumption;(3) in boosting rural consumption,emphasis should be put on various long-term policies.Fiscal expenditure should put more weight on consumption than on agriculture,forestry and irrigation;and(4) intra-county economies are crucial in kicking off rural consumption.Policies should be stressed for integrating rural consumption and the development of local economies.