Aggregate and disaggregate analysis on energy consumption and economic growth nexus in China

Abstract

This study examines the relationship between energy consumption and economic growth based on three models in China covering the period of 1982–2015. From the Ng-Perron (NP) and Zivot-Andrews (ZA) unit root test, each variable has no unit root in the first difference. Based on Johansen multivariable co-integration test and autoregressive distributed lag (ARDL) bounds test, the co-integrating relationship existed between selected variables. Moreover, dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), and ARDL estimates are used to estimate the coefficients of each variable, which presents that any increasing of each kinds of energy sources can increase China's economic growth in the long term. Additionally, the vector error correction model (VECM) Granger causality test based on three models is investigated. Some implications based on the empirical results are given.

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