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Real output, fossil fuels, clean fuels and trade dynamics: New insights from structural break models in China

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  • Nadeem, Muhammad
  • Wang, Zilong
  • Shakeel, Muhammad

Abstract

There are dire concerns of clean and green energy development with a sustainable economic growth in China. The present study aims to gauge the short term and long term relationship among the real economic output, labor, capital, energy and trade considering global financial crunch of 2008. There are two different models estimated in the production framework with fossil fuels and clean fuels in the economy of China. Specifically, there is indication of a long run association with convergence dynamics among real economic output, labor, capital, fossil fuel and trade before 2008 but not vice versa. The coefficient of fossil fuel with a greater magnitude is indicative of its huge role for higher real output growth, ceteris paribus. Likely, the findings turn out to be significant for real output, labor, capital, clean fuels and trade while long run elasticities corroborate that labor, capital, clean fuels and trade have a positive and significant impact on economic output. The sign and magnitude of the estimate of clean fuels is much higher than before crisis period indicating a paradigm shift in energy mix therein economic output growth. It is recommended that clean fuels should be promoted as their role is non trivial for economic-environmental sustainability in China.

Suggested Citation

  • Nadeem, Muhammad & Wang, Zilong & Shakeel, Muhammad, 2023. "Real output, fossil fuels, clean fuels and trade dynamics: New insights from structural break models in China," Applied Energy, Elsevier, vol. 350(C).
    • Handle: RePEc:eee:appene:v:350:y:2023:i:c:s0306261923011108
    DOI: 10.1016/j.apenergy.2023.121746
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