The Micro-foundation Studies of Monetary Policy Effect--An Empirical Analysis of the Chinese Residents' Consumption-savings Behavior

Based on the consumption-savings theory, we make an empirical analysis to explore the fundamental factors that affect the current consumption-savings behavior of Chinese residents and its working mechanism. Through the analysis, we find the necessary living texture play an important role though income remains the dominant factor. The major part of Chinese residents' income is composed of wages and salaries, which are insensitive to interest rate fluctuation. And the income from financial securities, which is highly sensitive to interest rate, only accounts for a very small part. It is permanent income rather than transient income that has a decisive impact on Chinese residents' consumption-savings behavior. The rising uncertainty of expectant income and the intensifying risk consciousness lead to an increase in precautionary saving. All these factors synthetically make for the insensitivity of Chinese residents' consumption-savings to interest rate, and thus weaken the effect of monetary policy.