An Empirical Study on the Relationship between Real Estate Investment and National Economic Growth in China - based on Granger Causality Test and Error Correction Model

Abstract

In recent years, there has been a close link between real estate investment and the national economy in China. This article selects the time series data of China's real estate development investment and national economic growth from 2000 to 2019, carries out price deflations to eliminate the inflation factor, and transforms the data into logarithms to eliminate heteroskedasticity, followed by the analysis using econometric theories such as co-integration theory, Granger causality test, and error correction model. The results show that: there is a long-term equilibrium relationship between the amount of real estate development investment and national economic growth in China; in the short term, the increase in real estate investment in China is the cause of national economic growth, while in the long term this relationship is not obvious; and the longterm elasticity of real estate investment to national economic growth is greater than the short-term elasticity.