Research on Nexus among Urbanization, Economic Growth and Energy Consumption in Shanghai

Abstract

Using the time serial data of Shanghai from 1978- 2010, this paper studies the long-term equilibrium relationship, short- term dynamic relationship and Granger causality among Shanghai's urbanization, economic growth and the energy consumption. The results indicate that urbanization, economic growth and energy consumption are co-integrated and that in the long-run Shanghai's urbanization and energy consumption Granger cause economic development, and Granger reason running from urbanization to energy consumption and from economic development to urbanization, and that in the short-run there is bi-directional Granger causality between Shanghai's urbanization and energy consumption. Index Terms - Energy consumption, Urbanization, Economic growth, Causality, Cointegration. I. Introduction The energy consumption is rising sharply with the rapid development of economy and the acceleration of urbanization in Shanghai City. The total quantity of energy consumption in Shanghai City was 54,994,800 tons of standard coal in 2000, and it increased to 111,608,700 tons of standard coal in 2010. Shanghai's energy is extremely scarce, taking the year 2010 as an example, the primary energy output of Shanghai City is only 723,900 tons of standard coal, and the vast majority of the required energy relies on the transfer from other provinces or the importation from other countries. It can be predicted that the economic growth and the further acceleration of urbanization in Shanghai City would inevitably lead to the sharp rise of its energy consumption, and the imbalanced state between energy supply and demand would be even more serious. Such restrictions on the energy input caused by the imbalance of supply and demand would inevitably affect the rate of economic growth and the progression of urbanization in Shanghai City. Therefore, the relationship among energy consumption, economic development and urbanization is studied by combining the situation of economic development and the progression of urbanization in Shanghai City, and the growth trend of energy demand is grasped on the basis of the study, so as to provide a scientific decision-making basis for relevant government departments, which has great significance for both the long-term planning of Shanghai's economy and the strategy making of energy development. Therefore, Shanghai City is taken as an example in this paper, according to the relevant annual data during 1978-2010, quantitative analysis on the relationship among urbanization, economic growth and energy consumption is carried out by applying the vector regression model (VAR) and the vector error correction model (VECM), and some relevant policy suggestions are proposed on the basis of empirical basis.