Research on Relationship between China's Social Security Expenditure and Consumption Level: Based on a Nonlinear-STR-Model

Abstract

The study verifies the existence of nonlinear relationship between social security expenditure and private consumption in China from 1952 to 2009 by applying nonlinear STR model. The main conclusions found that the relationship is obviously negative, while presents remarkable stage characteristic which is frequently converted between linear and nonlinear and which can be divided into three stages. The first stage is from the year 1958 to 1963; the negative nonlinear relationship is obvious. The year from 1964 to 1978 is the second stage, but the relationship is insignificant. The relationship reconverts to negative nonlinear in third stage from the year 1979 to 2009. According to these conclusions, the policy recommendations are proposed to promote private consumption in China.