Stable Economic Growth and Residents’ Consumption under the Expansion of Domestic Demand: Evidence from 258 Prefecture-Level Cities in China, 2012–2022

Abstract

Based on panel data from 258 prefecture-level cities in China over the period 2012–2022, this paper constructs an analytical framework to examine the impact of stable economic growth on residents’ consumption and investigates its underlying mechanism in the context of expanding domestic demand. The empirical results indicate that stable economic growth exerts a positive stimulative effect on residents’ consumption, and this effect becomes increasingly pronounced as economic growth remains stable. The growth of residents’ income serves as an important transmission pathway through which stable economic growth promotes consumption; that is, stable growth further elevates residents’ consumption levels via income growth. In sub-regional analyses, the consumption-promoting effect of stable economic growth is relatively stronger in the eastern region than in the central and western regions. Moreover, stable economic growth exerts a greater stimulative effect on rural residents’ consumption than on urban residents’ consumption. Further analysis reveals heterogeneity across income groups: the consumption-promoting effect of stable economic growth is largest for high-income groups, exhibiting an “economic growth dividend” pattern. These findings provide a reference for government formulation of policies and measures aimed at further narrowing the urban-rural gap and improving residents’ consumption levels.