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Energy Consumption, Economic Development and Temperature in China: Evidence from PSTR Model

Author

Listed:
  • Xiaoli He

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China; School of Economics and Management, Tianjin University of Science and Technology, Tianjin 300457, China)

  • Hongwu Wang

    (School of Economics and Management, Tianjin University of Science and Technology, Tianjin 300457, China)

  • Haoran Pan

    (School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China)

Abstract

Since the 1980s, the Chinese economy has developed rapidly, with an average annual growth rate around 10%. Energy consumption in China has greatly increased as well. This paper investigates the relationship between energy consumption, economic development and temperature in China by adopting provincial panel data from 1990 to 2011. Different from existing studies, in this paper, we use a panel smooth transition regression (PSTR) model to estimate the non-linearity relationship. Four different threshold variables including two lagged endogenous variables and two important exogenous variables have been considered. We find that energy intensity and the ratio of gross capital formation are suitable for the non-linearity model. The estimated elasticities of time dynamic indicate that energy consumption is income inelastic and temperature inelastic. Elasticities of real income at first increase and then decrease, however, elasticities of temperature gradually increase after the year 1993. Last of all, we propose some policy implications.

Suggested Citation

  • Xiaoli He & Hongwu Wang & Haoran Pan, 2014. "Energy Consumption, Economic Development and Temperature in China: Evidence from PSTR Model," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 9(4), pages 695-712, December.
    • Handle: RePEc:fec:journl:v:9:y:2014:i:4:p:695-712
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-003-014-0031-8
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    References listed on IDEAS

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    More about this item

    Keywords

    energy consumption; economic development; panel smooth transition regression model;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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