Abstract This paper empirically analyzes the relationship between terms of trade and China economic growth with the data 1980-2006. Our conclusions are as follows:(1)The analysis of the indicator of real GDP adjusted by terms of trade finds that the variations of net barter terms of trade generally have negative effects on China economic growth;(2)The results of co-integration analysis show that long term equilibrium exits between China economic growth and terms of trade. However, the coefficient of net barter terms of trade is not significant. The coefficient of income terms of trade is not very significant either;(3)The Granger causality test and the analysis of impulse response and variance decomposition all verify the results of co-integration analysis. Finally, the paper puts forward the corresponding countermeasures and suggestions.
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Received: 15 July 2009
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