『Abstract
This study takes a fresh look at the direction of causality between
energy consumption and economic growth in China during the period
from 1972 to 2006, using a multivariate cointegration approach.
Given the weakness associated with the bivariate causality framework,
the current study performs a multivariate causality framework
by incorporating capital and labor variables into the model between
energy consumption and economic growth based on neo-classical
aggregate production theory. Using the recently developed autoregressive
distributed lag (ARDL) bounds testing approach, a long-run equilibrium
cointegration relationship has been found to exist between economic
growth and the explanatory variables: energy consumption, capital
and employment. Empirical results reveal that the long-run parameter
of energy consumption on economic growth in China is approximately
0.15, through a long-run static solution of the estimated ARDL
model, and that for the short-run is approximately 0.12 by the
error correction model. The study also indicates the existence
of short-run and long-run causality running from energy consumption,
capital and employment to economic growth. The estimation results
imply that energy serves as an important source of economic growth,
thus more vigorous energy use and economic development strategies
should be adopted for China.
Keywords: Energy consumption; Autoregressive distributed lag;
China』
1. Introduction
2. Literature review
3. Methodology and data
3.1. Neo-classical production model
3.2. Unit root test
3.3. Cointegration
3.4. Granger causality
3.5. Data description
4. Results and discussion
4.1. Stationarity test
4.2. Cointegration test
4.3. Granger causality test
5. Policy implications
6. Summary and conclusions
Acknowledgments
References