Study on Higher Education and Economic Development in China and the United States-Based on Nonlinear Granger Causality Test

In this paper, we conduct a comparative research of China and US on the interaction between higher education and economy development. A new statistic for nonlinear Granger causality test proposed by Disk and Panchenko (2006) has been used. The results show that there exists a nonlinear Granger causality between the higher education and the economy development in China, but there is no nonlinear Granger causality between the higher education and the economy development in the United States. We thought the reason for this difference might be that China and US are at different developing stages of their economy. Dynamic analysis shows that higher education is always the nonlinear granger causality of economic development in China. However, this nonlinear causality between the higher education and the economy development varies in different period in the United States.