Causal Relationships Among Economic Aggregates in China

Using China's macro data from 1952-1989, the stationarity and causality tests tp two types of economic aggregates are applied. The first type relates to the conventional money, income and consumption relationship; and the other is associated with the interest rate, money and investment/income relationship as embodied in a financial repression model. Stationarity test results show that most variables have an integrated order of one. the causality test results show that a different direction of causality exists when different measurement of price is used. A causal relationship between interest rate, money and investment/income is also found