Study on the relationship between consumption structure and economic growth-based on VAR modeling

This study incorporates a constant term into the traditional VAR model and analyzes the time series data of Hunan Province from 2000 to 2021, constructs a VAR model based on the Engel's coefficient of urban and rural residents' consumption, and the per capita GDP of Hunan Province as the variables, and explores the correlation between the structure of residents' consumption and economic growth in Hunan Province. It is found that the VAR model incorporating the constant term is more suitable for the study of the relationship between consumption structure and economic growth than the traditional VAR model, which improves the fit of the model, makes the model effect more significant, and the results are more in line with the reality. And according to the analysis of this model, it is found that there is a unidirectional causal relationship between the consumption structure of Hunan residents and economic growth. Therefore, in order to achieve a benign interaction between the consumption structure and economic development in Hunan Province, it is necessary to continue to improve the income distribution system and promote the optimization of the consumption structure in the process of economic development, so that it can better drive the economic development of Hunan Province.