Abstract: Expanding the domestic demand is an important way to guarantee the stable and sustainable development of economy growth in the year of 2008 when the financial crisis happened all around the world.How to expand the domestic demand has to be paid much attention to.In this paper we use a panel data about 29 provinces,cities or areas in China to analyze the dynamic effect of urban-rural income inequity and compare the regional empirical results.We take the meaure of GLS and GMM to compare the static and dynamic effect and then we do regional comparative analysis.On the basis of the empirical results, we will have some policy suggestions.