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Energy consumption promotes economic growth or economic growth causes energy use in China? A panel data analysis

Shyh-Wei Chen (), Zixiong Xie () and Ying Liao ()
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Shyh-Wei Chen: Tunghai University
Zixiong Xie: Jinan University
Ying Liao: Jiangxi University of Finance and Economics

Empirical Economics, 2018, vol. 55, issue 3, 1019-1043

Abstract: Abstract This study tries to examine the causal relationship between energy consumption and economic growth for twenty-nine provinces of China by employing the panel Granger causality analysis. The econometric methodology used in this paper allows us to untangle the causal nexus between energy consumption and economic growth and helps us to discriminate between competing theories on which hypothesis is applicable to China. Among the main results, it is found that there is no causality in two out of twenty-nine provinces and bidirectional causality is observed in sixteen out of twenty-nine provinces. Unidirectional causality is observed in eleven out of twenty-nine provinces of China. When bootstrap critical values are used, our empirical findings indicate that there is an unidirectional causal link running from real output to energy use for China, implying that economic growth significantly affects energy consumption, and hence, the conservation hypothesis is applicable to China.

Keywords: Energy consumption; Economic growth; Bootstrap; Panel model; Granger causality (search for similar items in EconPapers)
JEL-codes: C32 Q43 (search for similar items in EconPapers)
Date: 2018
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