The Efficiency of Chinese Government Debt on Private Investment ----Tested by VAR Model

Abstract

This article discusses the theoretical model among government debt, interest rates and private investment, and then tests the efficiency of Chinese government debt on private investment by vector auto-regressive (VAR) model. We come the conclusion that government debt on the impact of private investment is neutral; then analyzes of the relationship among the debt, private investment and interest rate by Granger causality test, the conclusion is that the government debt issuance and interest rates does not exist Granger causal relationship, the government debt issuance and private investment also does not exist Granger causal relationship.