Empirical Study on the Relationship between Income and Consumption of Rural Residents in Hebei Province

Based on the relevant data of the actual income and consumption of rural residents in Hebei Province from 1983 to 2007, the relationship between actual income and consumption of rural residents was tested by applying the co-integration theory and Granger causality test. The result shows that there is long-term stable equilibrium relationship between the net income per capita and consumption expenditure per capita of rural residents in Hebei Province from 1983 to 2007; the result of Granger causality test shows that the actual income of rural residents in Hebei Province has significant impact on the actual consumption, but the impact is weakened gradually; in short term, the impact of the actual consumption on the actual income is not so significant, but the impact will become significant gradually as time goes on. During the process of the mutual impact and function of the actual income and consumption of rural residents in Hebei Province, the impact of the actual income of rural residents on the actual consumption is mainly represented in short term; in middle term, the interactions between the actual income and actual consumption are significant; in long term, the impact of the actual consumption on the actual income is mainly displayed. According to the result, in short term the government in Hebei Province can expand consumption through increasing the income of rural residents, while in long term the government can drive the economic growth by expanding domestic demands.