Threshold Effects of New Energy Consumption Transformation on Economic Growth

Fangming Xie, Chuanzhe Liu, Huiying Chen and Ning Wang
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Fangming Xie: School of Management, China University of Mining & Technology, Xuzhou 221116, China
Chuanzhe Liu: School of Management, China University of Mining & Technology, Xuzhou 221116, China
Huiying Chen: School of Management, China University of Mining & Technology, Xuzhou 221116, China
Ning Wang: School of Management, China University of Mining & Technology, Xuzhou 221116, China

Sustainability, 2018, vol. 10, issue 11, 1-14

Abstract: This study uses data from seven countries with high energy consumption levels in 1997–2016 (i.e., the US, China, Japan, Canada, South Korea, Germany, and France) to establish a panel threshold model and analyze the multiple threshold effects of new energy consumption transformation on economic growth. Research results show the non-linear impact of new energy consumption transformation on economic growth. On the one hand, the transformation of new energy consumption will occasionally bring economic costs, thereby resulting in a negative impact on economic growth. On the other hand, economic cost occasionally disappears, thereby resulting in the positive impact of the transformation of new energy consumption on economic growth. This study proposes that economic cost is affected by the levels of research and development (R&D), economic development, and traditional energy dependence, therefore, we use these three variables as threshold variables. Threshold variable is essential in a panel threshold model. The behavioral varies of model can be predicted when threshold variable is at different ranges of levels. In other words, the behavior of panel threshold model may change as the level of threshold variable changes. In particular, when the R&D level is used as a threshold variable, the impact of new energy consumption transformation on economic growth will change from negative to positive as the level of R&D increases. We present a similar conclusion when the level of economic development is used as a threshold variable. However, when the level of traditional energy dependence is used as the threshold variable, the impact of new energy consumption transformation on economic growth will change from positive to negative as the level of traditional energy dependence increases.

Keywords: new energy consumption transformation; economic growth; economic cost; threshold effects (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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