Abstract: Abstract:Based on residents’ consuming characteristics of our country, this paper analyses the relationship between the government spending and residents' consumption, and using the time-varying parameter model to explore its dynamic changes. Research shows that: As a whole, the government spending has packed effect on the urban consumption and rural consumption, but it presents like a “reverse U”. Analyzing from the structure, the investment spending and welfare spending have packed effect, but the consuming spending has extrusion effect. More specifically, the investment spending has packed effect on urban consumption, but rural consumption experiences a process of squeeze to extrusion. The consuming spending has extrusion effect on urban consumption, but rural consumption experiences a process of extrusion to squeeze. The welfare has packed effect on double urban consumption and rural consumption.

Key words: Key words:Government Spending, Consumption, The Time-varying Parameter Model