The long-run relationship between inflation rate and foreign direct investment in China
The study deals with testing the long run relationship between inflation rate and foreign direct investment for China covering the period from 1974 to 2015. The results of the unit root tests indicate that the series are non-stationary at their levels and stationary at first difference. Further, it is concluded that FDI and Inflation series are co-integrated and have long run equilibrium relationship. For short run relationship the Granger causality test is used and it is observed that there is no causal relationship between foreign direct investment and inflation in China.