Abstract:
This paper investigates the relationship between economic growth and government
debt for one of the biggest economies in the world,the economy of China. The data
were fitted into a regression equation using econometric techniques such as unit root tests and Granger causality. Regarding unit root tests we are using three kind oftests: i) The conventional unit tests, which do not take into account structural breaks, ii) the unit root tests that take into account one structural break and iii) tests that take into account multiple structural breaks. The analysis is based on data over the period 1984 to 2011 for China. The results reveal that there are structural breaks in the economy of China but no Granger causality between the variables.