A Comparative Analysis of Difference of MPCs in Separate Provinces with Dummy Variable Technique

摘要

With the dummy variable technique, the paper has done an econometrical analysis to compare marginal propensities to consume (MPC) in two typical provinces. It is found that MPCs are not as low as many people think and there are a big MPC difference between rich and poor provinces. The result is that MPCs decline in a short time, but they first decrease and then will rise for a long run. It is more significant to increase poverty population income to make an effort to pull domestic demand. The government has had a key role in formation of a high national saving rate. The Trade surplus is not necessary to continue to exist as the economic development reaches some stage.