The Reviews of the Relationships between Consumption, Income and Interest Rate

Abstract

Theories about consumption are very important parts in the macroeconomics research. The former studies found that the hypothesis consumption did not follow a random walk and consumption is excess sensitivity to income. In recent years, the traditional investment-based economic growth began to be questioned as China's economic growth began to decline. The adjustment of the entire economic structure is the main direction to solve the current problem. The most important thing is to pay attention to consumption and stimulate consumption. This paper reviews the previous studies of foreign economists of the relationships between consumption, income and interest rate. It should be able to make some contribution to China's economic restructuring.