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On the nonlinear relationship between energy consumption and economic development in China: new evidence from panel data threshold estimations

  • Xiao-Ying Dong
  • Qiying Ran
  • Yu HaoEmail author
Article
  • 31 Downloads

Abstract

According to China’s thirteenth “Five-Year Plan (2016–2020)”, the economic and social transition to the sustainable style has become the consensus of the Chinese government and the academic world. Given the important role of energy in China’s economic and social development, it is quite important to understand the effects of energy consumption on economic development. Despite a large body of literature in this field, very few studies have investigated the nonlinear relationship between the two. Based on the neoclassical growth model and the Cobb–Douglas production function, the present study uses the panel threshold regression model and provincial panel data covering the period 1985–2014 to investigate whether a nonlinear relationship exists between energy consumption and economic growth. The estimation results indicate that, although there is no evidence for such a nonlinear relationship for the whole nation, a single threshold exists for both eastern and noneastern regions; however, the elasticity of GDP with respect to energy consumption does not vary significantly either before and after the threshold is reached. Therefore, as China’s economy enters the phase of “new normal,” with a relatively lower growth rate, sufficient and reliable energy input is still required to maintain reasonable and sustainable economic growth.

Keywords

Energy consumption Economic development Cobb–Douglas production function Non-linear relationship Panel threshold regression 

Notes

Acknowledgements

The authors acknowledge financial support from the National Natural Science Foundation of China (71761137001, 71403015, 71521002), the Beijing Natural Science Foundation (9162013), the key research program of the Beijing Social Science Foundation (17JDYJA009), the National Key Research and Development Program of China (2016YFA0602801, 2016YFA0602603), Special Fund for Joint Development Program of the Beijing Municipal Commission of Education, Scientific Research Program for Higher Education in Xinjiang (XJEDU2017T003), and Key Projects of Humanities and Social Sciences Bases for Higher Education in Xinjiang (010116B03). The authors are also very grateful to two anonymous reviewers, and Editor-in-Chief Prof. Vittorio Capecchi for their insightful comments that helped us sufficiently improve the quality of this paper. The usual disclaimer applies.

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Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina
  2. 2.Center for Energy and Environmental Policy ResearchBeijing Institute of TechnologyBeijingChina
  3. 3.Sustainable Development Research Institute for Economy and Society of BeijingBeijingChina
  4. 4.Beijing Key Lab of Energy Economics and Environmental ManagementBeijingChina
  5. 5.Collaborative Innovation Center of Electric Vehicles in BeijingBeijingChina
  6. 6.Center for Innovation ManagementXinjiang UniversityUrumqiChina
  7. 7.College of Economics and ManagementXinjiang UniversityUrumqiChina

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