Theoretical and Empirical Study on China's Interest Rates Liberalization,Exchange Rates Form Mechanism and Capital Account Liberalization

In 1978,a phalanx of reform and opening up policy in China,has been established,thus carrying out the reforms of liberalization of interest rates,exchange rates and capital account liberalization.This paper verifies the development theory between interest rate,exchange rate and capital account liberalization from the angel of theoretical and empirical aspect.To this end,some econometric methods such as cointegration test,VAR model and Granger causality test are used to analyze the data from 1981 to 2005.The Conclusion is;from the cointegration equation,China's current exchange rate and interest rate plays an reverse role in opening capital account; From the point of error correction model,capital account opening to the development of exchange rate and interest rate is a significant positive role in promoting;From the point of granger causality test,capital account liberalization can promote the development of interest rate and exchange rate.