Higher Education, Real Income and Real Investment in China: Evidence from Granger Causality Tests

Education Economics, 14(1): 107-125.

Posted: 11 Jun 2012

See all articles by Paresh Kumar Narayan

Paresh Kumar Narayan

Deakin University - School of Accounting, Economics and Finance

Russell Smyth

Monash University - Department of Economics

Date Written: 2006

Abstract

This paper employs cointegration and error-correction modelling to test the causal relationship between real income, real investment and tertiary education using data for the People's Republic of China over the period 1952-1999. To proxy tertiary education we use higher education enrolments and higher education graduates in alternative empirical specifications. One of the paper's main findings is that real income, real investment and tertiary education are cointegrated when real investment is the dependent variable, but are not cointegrated when either tertiary education or real income is the dependent variable. We also extend the in-sample analysis to examine the decomposition of variance and impulse response functions.

Suggested Citation

Narayan, Paresh Kumar and Smyth, Russell, Higher Education, Real Income and Real Investment in China: Evidence from Granger Causality Tests (2006). Education Economics, 14(1): 107-125. , Available at SSRN: https://ssrn.com/abstract=2081254

Paresh Kumar Narayan (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Russell Smyth

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia

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