Abstract:In the light of Lacoviello, a theory model about representative consumer intertemporal consumption utility maximization, this paper brings consumption of non economic public goods into the consumption utility function, analyzes the influence mechanism of “land finance” dependence on the part of local government on the consumption of residents. The results find that the local government relies heavily on “land finance” to indirectly affect the consumption of residents through the influence of local government fiscal expenditure structure and price fluctuations. Based on empirical evidence from 30 provinces of China from 2003 to 2012 and System Generalized Method of Moments, we make an empirical test of the hypothesis. The research results show that: there is a significant negative correlation between “land finance” dependence on the part of local government and consumption of residents. Taking into account the urban-rural dual economic structure in China, this paper further divides the residents consumption expenditure into two major categories of urban and rural resident consumption expenditure. The results indicate that “land finance” dependence degree of the local government is negatively correlated with the consumption of rural residents and positively correlated with the consumption of urban residents.