An empirical analysis on the relationship of M<inf>1</inf>, IEC and IBC based on the Eviews7.0 Software

Abstract

According to the co-integration and related theories in Econometrics, using quarterly data from July 2007 to June 2009, based on the EViews7.0 Software this article does the empirical research on the relationship of China's money supply, index of business confidence and index of business climate. The results show that there is a long-run equilibrium relationship between the money supply and the index of business confidence. The money supply affects the index of business confidence, and the greater the money supply, the lower the index of business confidence. While there is a correlation between the money supply volume and the index of business climate, the money supply does not affect the index of business climate, namely, increasing money supply is unlikely to lead to depressed business conditions, even if the money supply appropriate, business conditions may also be recession.