Currently, regional economy is develop ing very well while overal urban and rural development is so worsing in Zhejiang province. Based on the impulse response analysis, the level of overall urban and rural development declines after being attacked by a standard difference and the gap is growing larger year by year, which shows that the develop ing gap between urban and rural areas is getting larger accompanied by regional economic development, and the larger gap is reversely the obstacle to the regional economic development if no policies to p romote it to be closed. So there exists the correlationship between regional economic developemnt and overall urban and rural development