Transportation Network Density, Domestic Market Integration and Excess Sensitivity of Household Consumption

Abstract

Abstract From the perspective of domestic market integration, this paper systematically examines the impact of transportation infrastructure conditions on excess sensitivity of household consumption based on the China Family Panel Survey (CFPS) and multi-level matching panel data of transportation network density. The results show that the fast-growing development of the transportation infrastructure network has a significant alleviating effect on excess sensitivity of household consumption along the route, and the conclusion is still robust after the use of the multi-dimensional instrumental variable method and a series of robustness tests. According to the heterogeneity tests, in terms of the alleviating effect of transportation infrastructure, railroads rank the first, highways the second, substandard roads the third, waterways the fourth, and roads of other grades at the bottom. The mechanism test reveals that the improvement of domestic market integration is an important channel for transportation infrastructure to alleviate excess sensitivity of household consumption. This paper confirms that improving the transportation infrustructure system is conducive to the construction of a unified national market, alleviating excess sensitivity of consumption and stimulating consumption.This paper provides suggestions for implementing the strategy of boosting domestic demand, and helps the government understand households’ consumption decision-making from a broader perspective. This study also provides a theoretical basis for the economic spillover effect of transportation infrastructure.