Li Suyuan, Adnan Khurshid

Ocean University of China

 China

adnankhurshid83@gmail.com

The eFFect of interest rate on investment; Empirical evidence of Jiangsu Province, China

ABSTRACT. The main reason of this study is to test the interest rate impact on investment in Jiangsu Province of China. Jiangsu has the largest quantity of investment in China. For long run, nexus Johansen Co-integration test is employed. Whereas, vector er- ror correction model (VECM) is used to find short run association over the period of 2003-2012. The results indicate that there is a long-term relationship association among variables. It has negative relation in the long run but positive in short run. This research also produces suggestions that will help in terms of interest rate policy as well as improving investment that promotes economic growth in Jiangsu Province.

Received: February, 2015

1st Revision: April, 2015

Accepted: May, 2015

DOI: 10.14254/2071-

8330.2015/8-1/7

JEL Classification: E40, E20, C22

Keywords: : Interest rate, investment, Jiangsu Province, VECM