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

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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 

JEL Classification

C32 Q43 
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Notes

Acknowledgements

We would like to thank the editor, Professor Robert M. Kunst, and two anonymous referees of this journal for helpful comments and suggestions. The usual disclaimer applies. The second author is supported by the National Social Science Fund of China (No. 15ZDA054), National Natural Science Foundation of China (No. 71333007) and “The Fundamental Research Funds for the Central Universities.” The third author is supported by the National Natural Science Foundation of China (Nos. 71663026, 71273122, 41461025), Postdoctoral Science Foundation Grant of China (No. 2015M571981) and Jiangxi Social Science Fund (No. 15YJ11).

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Copyright information

© Springer-Verlag GmbH Germany 2017

Authors and Affiliations

  1. 1.Department of International BusinessTunghai UniversityTaichungTaiwan
  2. 2.Department of International Economics and Trade, Institute of Resources, Environment, and Sustainable Development, College of EconomicsJinan UniversityGuangzhouChina
  3. 3.School of Statistics, Research Center of Applied StatisticsJiangxi University of Finance and EconomicsNanchangChina

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