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http://dx.doi.org/10.5762/KAIS.2012.13.10.4506

A Causality Analysis of Electricity Consumption and Economic Growth in China  

Li, Ming-Huan (Department of Economics Hoseo University)
Jung, Kun-Oh (Department of Economics Hoseo University)
Lim, Eung-Soon (Economic Research Institute, Hoseo University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.13, no.10, 2012 , pp. 4506-4513 More about this Journal
Abstract
The purpose of this study is to analyze the causality of electricity consumption and econmic growth and draw policy implications. To do this, we used Testing Prodedures of Unit Root and Cointegration and then VECM and Granger causality test using data taken from China over the period 1971 to 2008. As results, there are long and short term causalities between electricity consumption and economic growth of China. These results provide a few implications to policy analysts in China. First it is still available that the electricity comes before the economic development. The increase of electricity consumption promotes economic growth. Of course there are other factors to the economic growth, but the stable supply of electricity is necessary. Second, this paper confirms the assertion that the increase of GDP expands electric consumption is valid.
Keywords
Economic growth; Electricity consumption; Unit root; Cointegration; Granger causality;
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