An Empirical Analysis Of The Interest-rate Liberalization Under Open Economy In China

This thesis explores the liberalization of interest-rate under open economy in China. Its definition is given in theory, and discussed initially relative objects and factors inluenced by it before and after liberalization. The interest theories are also reviewed in the sequence of Economics Schools, focusing on McKinnon-Shaw Model. Variables are selected which may influence interest rate of marketing from multi-angles, and model-building analyze are made to the formative mechanism of interest rate of marketing of China through cointegration theory and Granger causality testing which based on VAR and impulse-response function analysis. It can conclude that macro-economical data of China are all non-stationary and contain a Unit Root. Granger causes which influenced interest rate of marketing through Grange causality testing,then built interest rate of marketing models with cointegration theory.It can conclude that Gross domestic product (GDP),Inflation rate(CPI),Exchange rate, money supply(M0,M1) are factors which influence interest rate of marketing mostly from long term equilibrium equation. The short-term dynamic ECM (error correction model) is built at last and have preferably the precision of forecasting. From impulse-response analysis and variance decompose based on VEC model, these variables would have bigger shock to interest rate of marketing in the short run and stability shock in the long run. Therefore, the model has good consult function for interest rate of marketing forecasting and controlling.