The Research And Application Of Co-integration On Economy

Economy theory considers that some time sequences exist equilibrium relation long-term. Although they seem likely to having no relation, they may be balanced via linear combination. Granger took notice of this and gave the concept of co-integration. Co-integration means the linear combination with non-stationary variable would be stationary. Now, the application of co-integration is effective in finance and economy. Co-integration theoretic focuses on the validation the equilibrium relation with variables and it is also important for econometric models.Granger also gave co-integration theorem for resolving the relation between co-integration and error-correction model. The theorem proves that if non-stationary variables exist co-integration connection, they could establish error-correction model, and Vice versa.This thesis mainly introduces the Co-integration theoretic and applies to the economy. Shanghai as a sample to approve the effect of Co-integration theoretic using in the research on the economy development of China. The article based on Co-integration do some research on the limited effect on economy growth by energy consumption and the test effect on economy growth by infrastructure build. The sample of Shanghai is being used to prove the correct effect of applying Co-integration theoretic to economy growth.