The effect of interest rate on investment; Empirical evidence of Jiangsu Province, China

Information
Title: The effect of interest rate on investment; Empirical evidence of Jiangsu Province, China
Issue: Vol. 8, No 1, 2015
Published date: 20-05-2015 (print) / 20-05-2015 (online)
Journal: Journal of International Studies
ISSN: 2071-8330, eISSN: 2306-3483
Authors: Li Suyuan
Adnan Khurshid
Keywords: Interest rate, investment, Jiangsu Province, VECM
DOI: 10.14254/2071-8330.2015/8-1/7
DOAJ: https://doaj.org/article/c862ddce1fe34e779e5d7af29e6ce5f5
Language: English
Pages: 81-90 (10)
JEL classification: C22
Website: http://jois.eu/files/JIS_Vol8_No1_Wuhan_Suyuan_Khurshid.pdf
File https://www.jois.eu/files/JIS_Vol8_No1_Wuhan_Suyuan_Khurshid.pdf
Abstract

The main reason of this study is to test the interest rate impact on investment in Jiangsu Province of China. Jiangsu has the largest quantity of investment in China. For long run, nexus Johansen Co-integration test is employed. Whereas, vector er- ror correction model (VECM) is used to find short run association over the period of 2003-2012. The results indicate that there is a long-term relationship association among variables. It has negative relation in the long run but positive in short run. This research also produces suggestions that will help in terms of interest rate policy as well as improving investment that promotes economic growth in Jiangsu Province.