Macro Debt Burden and Consumption Expansion: An Analysis Based on Panel Model and Panel Quantile Regression Model

Abstract As the level of social credit burden rises, to ease the liquidity constraint for residents is currently an important way to boost the domestic demand in China. This paper uses the panel data of Chinese provincial-level administrative units in 2007−2017 and adopts the panel regression model and panel quantile regression model to empirically analyze the relationship between debt burden level and average propensity to consume (APC). The result shows that increase in the level of macro debt burden can significantly improve the APC of residents; the marginal promoting effect of macro debt burden for the APC is in a V-shaped structure; such marginal influence differs evidently in different areas, with the marginal promoting effect turning out most prominent in the northeast of China. Accordingly, it’s suggested for government to keep refining the credit market, increase residents’ income in multiple means, guide supply of liquidity towards the real economy and promote equalization of basic public services, so as to realize the expansion and upgrade of consumption.