Interactive Relations among the Chinese Domestic Trade, Foreign Trade and Economic Growth: An Impulse Response Analysis Based on the VAR Model.

Abstract: On the basis of the co-integration method and the VAR model, this paper analyzed the interactive relations among Chinese domestic trade, foreign trade and economic growth by impulse response faction, finding that at the 5% significant level, the economic growth relates to the domestic trade and the domestic trade to the foreign trade both in the manner of the bidirectional Granger causality; however, economic growth Granger causes foreign trade but foreign trade does not Granger cause economic growth. In the long run, economic growth can not only have self-promotion, but also have remarkable positive effects on both domestic trade and foreign trade; the domestic trade lacks organizing faculty and has little effect on economic growth; the foreign trade itself has big fluctuations but its effects on economic growth are significant though unstable; the two kinds of trade are in the relation of mutual substitution. [ABSTRACT FROM AUTHOR]