This paper simply expands two famous consume functions referring to macro-\neconomics: Keynesian consumption function and Life-cycle consumption\nfunction; attempting to introduce the empirical proxy variance of irrational\nfacts: money illusion and over-reaction, we rebuild a new Keynesian consumption\nmodel and Life-cycle consumption model, both of which are based\non the hypothesis of resident�s irrational behavior. Then we use the new model\nto empirically test the macroeconomic years� data of China�s urban residents\nfrom 1978 to 2013 and China�s rural residents from 1985 to 2013. The\nempirical results show that all residents of China are irrational, however, the\nreasons of cause irrational consumption are different, and the urban residents\nmay be for money illusion, but the rural residents may show over-reaction to\nprice volatility. Finally, we give theory analysis about the differences of the\ntwo irrational consumption behaviors and the results of the paper.
Loading....