Re-evaluating China’s New Energy Demonstration Cities with two-way fixed effects: A comment

You Wu () and Andrew Burlinson ()
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You Wu: School of Economics, University of Sheffield, Sheffield S10 2TU, UK
Andrew Burlinson: School of Economics, University of Sheffield, Sheffield S10 2TU, UK

No 2026002, Working Papers from The University of Sheffield, Department of Economics

Abstract: China’s New Energy Demonstration City (NEDC) policy aims to address energy and environmental challenges. While two-way fixed effects (TWFE) regression is often used to evaluate such policies within difference-in-differences frameworks, it can lead to incorrect conclusions if unit and time effects are mis-specified. Re-evaluating the impact of the NEDC policy on energy poverty (EP), as studied in Ma et al. (2025), by correctly specifying unit-specific and time-specific effects, we find that: i) the parallel trends assumption fails, and ii) the previously reported impact on EP becomes economically and statistically insignificant. Whether NEDCs reduce EP therefore remains an open question.

Keywords: Policy evaluation; Two-way fixed effects regression; Difference-in-differences; Energy Poverty (search for similar items in EconPapers)
JEL-codes: C12 C23 Q41 Q48 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2026-03
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
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