Electricity consumption and economic growth in China : a cointegration analysis

K.-Y. CHEUNG, E. THOMSON

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

Abstract

In terms of the total electricity consumption, China currently ranks second in the world after the US. The demand for electricity is predicted to grow at an average annual rate of 5.9% between 1999 and 2020, significantly above the 3.3% world average. In order to establish a rational policy, the government must know how the changes in economic growth affect the electricity consumption. This study examines the causal relationship between the consumption elasticity and economic growth in China during the period 1952-2000. Through the use of cointegration techniques it is found that the long-run income elasticity and long-run price elasticity were 1.1 and -1.3, respectively. The error correction model showed that there exists bidirectional causality between the gross domestic product and electricity consumption. In other words, there is a Granger-type causal relationship between the electricity consumption and economic growth.
Original languageEnglish
Pages (from-to)99-108
Number of pages10
JournalPacific and Asian Journal of Energy
Volume11
Issue number2
Publication statusPublished - 1 Jan 2001

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Consumption growth
Electricity consumption
China
Economic growth
Cointegration analysis
Electricity
Elasticity
Causality
Price elasticity
Error correction model
Cointegration
Government
Income elasticity
Gross domestic product

Cite this

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title = "Electricity consumption and economic growth in China : a cointegration analysis",
abstract = "In terms of the total electricity consumption, China currently ranks second in the world after the US. The demand for electricity is predicted to grow at an average annual rate of 5.9{\%} between 1999 and 2020, significantly above the 3.3{\%} world average. In order to establish a rational policy, the government must know how the changes in economic growth affect the electricity consumption. This study examines the causal relationship between the consumption elasticity and economic growth in China during the period 1952-2000. Through the use of cointegration techniques it is found that the long-run income elasticity and long-run price elasticity were 1.1 and -1.3, respectively. The error correction model showed that there exists bidirectional causality between the gross domestic product and electricity consumption. In other words, there is a Granger-type causal relationship between the electricity consumption and economic growth.",
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Electricity consumption and economic growth in China : a cointegration analysis. / CHEUNG, K.-Y.; THOMSON, E.

In: Pacific and Asian Journal of Energy, Vol. 11, No. 2, 01.01.2001, p. 99-108.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

TY - JOUR

T1 - Electricity consumption and economic growth in China : a cointegration analysis

AU - CHEUNG, K.-Y.

AU - THOMSON, E.

PY - 2001/1/1

Y1 - 2001/1/1

N2 - In terms of the total electricity consumption, China currently ranks second in the world after the US. The demand for electricity is predicted to grow at an average annual rate of 5.9% between 1999 and 2020, significantly above the 3.3% world average. In order to establish a rational policy, the government must know how the changes in economic growth affect the electricity consumption. This study examines the causal relationship between the consumption elasticity and economic growth in China during the period 1952-2000. Through the use of cointegration techniques it is found that the long-run income elasticity and long-run price elasticity were 1.1 and -1.3, respectively. The error correction model showed that there exists bidirectional causality between the gross domestic product and electricity consumption. In other words, there is a Granger-type causal relationship between the electricity consumption and economic growth.

AB - In terms of the total electricity consumption, China currently ranks second in the world after the US. The demand for electricity is predicted to grow at an average annual rate of 5.9% between 1999 and 2020, significantly above the 3.3% world average. In order to establish a rational policy, the government must know how the changes in economic growth affect the electricity consumption. This study examines the causal relationship between the consumption elasticity and economic growth in China during the period 1952-2000. Through the use of cointegration techniques it is found that the long-run income elasticity and long-run price elasticity were 1.1 and -1.3, respectively. The error correction model showed that there exists bidirectional causality between the gross domestic product and electricity consumption. In other words, there is a Granger-type causal relationship between the electricity consumption and economic growth.

UR - http://commons.ln.edu.hk/sw_master/6864

M3 - Journal Article (refereed)

VL - 11

SP - 99

EP - 108

JO - Pacific and Asian Journal of Energy

JF - Pacific and Asian Journal of Energy

SN - 0970-3888

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