An Empirical Study On The Relationship Between The Interest Rate Adjustment And Economic Growth

The relationship between interest rates and economic growth has been the hot topic that domestic and foreign scholars have explored.The Chinese economy is currently facing an economic downturn,overcapacity,tight liquidity and negative real interest rates and other issues,how to improve the interest rate reform under the "new normal" economy,so as to promote long-term stable development of the economy will be a major tasks and challenges.In order to cope with the impact of external financial crisis,only in 2007,the People’s Bank were up to 6 times the benchmark deposit and lending interest rate adjustments,which highlights the importance of macroeconomic regulation and control of interest rates.Loan interest rate marketization to truly achieve 2013.After a lapse of two years,the central bank in November 2014 and in March 2015 announced the rate cut,China is expected to enter a new round of rate cut cycle.The interest rate corresponds to several adjustments,it is gradually slowing economic growth and slightly pessimistic economic expectations.Therefore,it is necessary to further investigate the effect of the relationship between China interest rate adjustment and economic growth,and provide a reasonable and effective recommendations on this basis,to provide new ideas for China’s interest rate market steadily.Firstly,this paper reviews the existing research on the relationship between interest rates and economic growth in terms of research achievements,specifically describes the interaction mechanism between economic growth and interest rate,and on the basis of Harrod-Domar economic growth model,the influence of interest rate on economic growth effect of the two kinds of decomposition:(1)the investment scale and investment efficiency effects;(2)savings and investment efficiency of scale effects,reflecting the interest rate’s influence on economic growth from saving and investment aspects,which is the basis of the empirical analysis of this article.Thereafter,this paper makes a descriptive statistical analysis on nearly thirty years of China’s interest rate adjustment and economic growth,using the correlation analysis shows that the actual deposit and lending rates and high correlation between real GDP growth rate.In the empirical analysis,this paper according to China between 1980-2013 macroeconomic data,the use of Koyck infinite distributed lag model transformation into a self-regression model,the first conduction effect on interest rates decomposition analysis of the impact of changes to adjust the size of the economic growth,and through Co-integration and error correction methods,for the one-year deposit and lending rates affect the relationship between economic growth and long-term analysis of the dynamic relationship.Empirical evidence shows that economies of scale and savings of scale investment real deposit and lending rates are weak,and the corresponding effect of investment efficiency is very low,indicating that higher real interest rates for deposits and loans indeed promotes economic growth,but the effect was not significant,the Government when the macro-control,the need to use common with other policy instruments.Interest rates in guiding financial market allocation of resources is not very clear,the role of interest rate reform is a gradual process,the government must make overall planning and comprehensive consideration.Therefore,central government should continue to improve related measures continue to improve the interest rate transmission mechanism,and promote market-oriented reform of interest rates.