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Why Is the Growth of Economy and Welfare Different in China? A Theoretical and Empirical Study

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  • Songtao Wang
  • Lihong Song

Abstract

Based on the hypothesis of consumption utility and capital utility, the paper testifies the existence of the sole point of equilibrium between consumption and investment, and constructs a resident micro-utility function. It further derives a general gross national utility function combining the function with Lorenz curve, and exploits it to simulate national utility function in China with the statistical data. Furthermore it calculates the national welfare growth over the years, and analyses the differences and reasons between national welfare growth and GNP growth. The result indicates that the GNP growth has not brought about corresponding resident welfare growth. It can attribute to the uneven distribution of wealth, the decease of the ratio of consumption to GNP, and the inflation of prices, etc.

Suggested Citation

  • Songtao Wang & Lihong Song, 2015. "Why Is the Growth of Economy and Welfare Different in China? A Theoretical and Empirical Study," Research in World Economy, Research in World Economy, Sciedu Press, vol. 6(2), pages 30-38, June.
    • Handle: RePEc:jfr:rwe111:v:6:y:2015:i:2:p:30-38
    DOI: 10.5430/rwe.v6n2p30
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    References listed on IDEAS

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    4. Bakshi, Gurdip S & Chen, Zhiwu, 1996. "The Spirit of Capitalism and Stock-Market Prices," American Economic Review, American Economic Association, vol. 86(1), pages 133-157, March.
    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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