Abstract
This paper develops a dual sectors dynamic equilibrium model and introduces electricity consumption and water consumption in a growth model that tested by using a time series data set from 1950 to 2014 in Guangzhou, China. It presents a theoretical prediction on the interactions between electricity consumption, water consumption, and the metropolitan economic growth. Consistent with this prediction, electricity consumption and water consumption by themselves appear to have significant effects on metropolitan economic performance. The cointegration techniques show that electricity consumption, water consumption, and the metropolitan economic performance have long-run equilibrium relationship. The results of kernel-based regularized least squares reveal that metropolitan economic growth is positively correlated with electricity consumption. Also consistent with the theory, water consumption is positively associated with metropolitan economic performance. These results are generally stable and hold with alternative measures of unit roots, with alternative estimation strategies, and with or without controlling for trends, intercepts, and break points.
Highlights
Casual empiricism suggests the presence of significant differences in metropolitan economic growth in China
This study finds the following: 1) electricity consumption, water consumption, and the metropolitan economic performance have long-run equilibrium relationship; 2) the kernel-based regularized least squares (KRLS) approach reveals that metropolitan economic growth is positively correlated with electricity consumption and water consumption is positively associated with metropolitan economic performance; and 3) results of unit roots are generally robust with alternative estimation strategies and with or without controlling for trends, intercepts, and break points
The empirical results indicate that the metropolitan economic growth is positively correlated with the electricity consumption and the water consumption is positively associated with the metropolitan economic performance
Summary
Casual empiricism suggests the presence of significant differences in metropolitan economic growth in China. China’s electricity consumption, heavy reliance on fossil fuel, and watering down environmental regulations have significantly affected the economic development of the country. There has not been a systematic analysis of long-run differences in metropolitan economic growth with both electricity consumption and water consumption. Our primary motivation in this paper is to make a first attempt at such a systematic analysis and to investigate the relationship between electricity consumption, water consumption, and metropolitan economic growth in Guangzhou, China. Electricity is one of the most studied energy classes—and for good reason. Growing demands for electricity and water resources and increasingly serious environmental challenges, in metropolitan areas of developing countries like China, have elevated the urgency of studying the water-energy-growth nexus (Lai et al, 2011). In 2012, China was the largest contributor to carbon emissions, and with 8.50 Gt in CO2 emissions from fossil burning and cement production in 2012, China was responsible for 25% of global carbon emissions, which was equivalent to the emissions of the U.S and the E.U. combined
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