Margin Testing Theory, Demand For Elements Of China's Economic Growth

From the total demand form of Macro-economic, the engine of the economic growth is constituted by the consumption, investment and net export. Economic growth of our country has got great achievement since the implementation of reform and open-door policies, the amount of the economy is increasing rapidly, and the three major demands have played a significant role in boosting economic growth. In particular, since the 2008 international financial crisis, China's economy has been seriously affected and how better to start domestic demand and stimulate consumption has been the current economic difficult and hot issue in the theoretical circle. To correctly predict the influence degree of all constituent elements of the needs on economic growth is the key to the effective implementation of macroeconomic regulation and control. Therefore, to study the influence degree of all constituent elements of the needs on our country's economic growth has importantly practical significance.This paper seeks to use a combination method of theory and practice, standardized analysis and empirical analysis, quantitative analysis and qualitative analysis to study the impact of the elements of needs on China's economic growth, and first tries to apply the Bounds testing theory proposed by Perasan etal (2001) to the study of China's economic growth, and first attempts to put the CUSUM and CUSUMSQ testing into co-integration analysis to examine the stability between China's economic growth and its affecting factors, and first unbundles the final consumption expenditure and simultaneously analyses the six needs elements--final consumption expenditure of rural residents, final consumption expenditure of urban residents, final consumption expenditure of government, gross capital formation, total exports and total imports on the impact of China's economic growth in a mode.First of all, this paper gives a rational discourse of the inherent mechanism of the demand factors'impact on economic growth, and from the theoretical and logic views the consumer demand, investment demand and net export demand are compared in the role of boosting economic growth.In order to quantitatively reveal the role of the elements of demand on the economic growth situation in practice, this paper step by step analyses and compares the proportion changes in GDP and contribution situation to economic growth of the various elements of the needs from the 1978 to 2007 year. In order to reflect consumer demand's contribution on China's economic growth in detail, we further analyze the elasticity of consumer demand. Then, in order to better forecast the impact of the various elements of demand on economic growth in China, based on the unrestricted error-correction model, we have used bounds testing to carry out empirical studies. The results verify that there is a long-run equilibrium relationship between the demand for economic growth and its determinants, and the different components of economic demand have different impacts on the economic growth in China. In the long run, only gross capital formation has a positive effect on the economic growth, in the short run, each element of demand is found to be significant.Finally, this paper further analyses the China's economic situation in the year 2008 and 2009 and the impact of constituent elements of the needs on the economic growth, and puts forward specific recommendations on how to get rid of the constraint of economic growth due to the lack of domestic demand, promote our economic growth and foreign trade growth mode, and promote the sustainable growth of our economy.