A Study On Private Investment, Economic Growth And Income Gap

In this article, we carry the relationship between private investment, economic development and income gap on the analysis by using the 1995~2012 time series data, panel data and establishing the VAR, the panel cointegration model.Private investment is important for economic growth. Between the private investment and the residents’ income gap has an inner mechanism. Study the relationship of the three is a new exploration. The study has a certain theoretical significance for improving the residents’ income distribution inequality, polarization problems. The first part, we combed the scholars’ study about the three. we carry the relationship between private investment, economic growth and income gap on the empirical analysis based on collection and analysis.The second part is the empirical part. Firstly, we introduced the data in the text. And by the 1995~2012 data and unit root test, VAR model, and so on,we put the relationship among the three on the analysis. And, the results of the study imply that the three variables has a equilibrium relationship.Private investment growth is conducive to narrowing the and the influence is long term.Economic development is good for the inequality of income.In turn, the expansion of income gap also plays a certain role in economic growth.Income gap of residents and private investment have a connection with economic development, while the Granger Cause of private investment isn’t income inequality. At last, we carry the relationship among the three on the analysis using panel data of 26 provinces or cities and establishing the panel cointegration model.Results indicate that private investment, economic growth and income disparity have a long-term equilibrium relationship.Private investment and economic growth could expand Chinese income gap. The interaction of the private investment and economic growth is of great significance to narrow the Chinese income gap.In the third part, based on related outcomes, we raise some countermeasures and suggestions. This study provides a theoretical evidence for the government to promote the diversification of investment, increase the proportion of private investment, change the way of promoting economic growth and improve the phenomenon of income inequality.