Abstract
This study uses the improved Cobb-Douglas two-factor production function model to explore the potential relationship between economic growth and energy consumption through the multiple co-integration test on the panel data of China from 1985 to 2018. The results show that there is a positive long-term balance between energy consumption and economic growth: economic growth of 1%, total energy consumption growth of 1.53%, which means that economic growth needs higher energy support in the former short term. At the same time, the error correction term will converge energy consumption to a long-term equilibrium state with an adjustment intensity of 134.59%. From the results of variance decomposition, we can also see that as the number of periods increases, the part of real economic growth explained by energy consumption gradually increases.
Highlights
After more than 40 years of reform and opening up, with the development of China’s urbanization and industrialization, economy has continued to maintain rapid growth
Based on data from 1985 to 2018, this paper focuses on the relationship between energy consumption and economic growth in China
The main conclusions are as follows: Firstly, we learn from the co-integration test that there is a long-term equilibrium between China’s economic growth and energy consumption, that is, every 1% increase in GDP will increase energy consumption by 1.53%
Summary
After more than 40 years of reform and opening up, with the development of China’s urbanization and industrialization, economy has continued to maintain rapid growth. China’s dependence on energy is becoming more and more deep, and the amount of energy consumed every year is increasing. The gap between energy supply and demand is growing, and the imbalance between energy supply and demand is increasing. Coal is the main energy source used in China [1,2,3]. China’s economic development has improved significantly, but the comprehensive economic growth pattern and coal-dependent energy consumption structure have increased pollution and environmental damage. This article explores energy-GDP relationships and discusses how to use energy efficiently to ensure sustainable development
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