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Sustainability 2017, 9(12), 2299; https://doi.org/10.3390/su9122299

Revisiting the Granger Causality Relationship between Energy Consumption and Economic Growth in China: A Multi-Timescale Decomposition Approach

1,* and 2
1
School of Economics, Zhejiang University of Finance and Economics, Hangzhou 310018, China
2
School of Economics and Management, Nanchang University, Nanchang 330031, China
*
Author to whom correspondence should be addressed.
Received: 13 November 2017 / Revised: 5 December 2017 / Accepted: 9 December 2017 / Published: 11 December 2017
(This article belongs to the Section Energy Sustainability)
Full-Text   |   PDF [2132 KB, uploaded 11 December 2017]   |  

Abstract

The past four decades have witnessed rapid growth in the rate of energy consumption in China. A great deal of energy consumption has led to two major issues. One is energy shortages and the other is environmental pollution caused by fossil fuel combustion. Since energy saving plays a substantial role in addressing both issues, it is of vital importance to study the intrinsic characteristics of energy consumption and its relationship with economic growth. The topic of the nexus between energy consumption and economic growth has been hotly debated for years. However, conflicting conclusions have been drawn. In this paper, we provide a novel insight into the characteristics of the growth rate of energy consumption in China from a multi-timescale perspective by means of adaptive time-frequency data analysis; namely, the ensemble empirical mode decomposition method, which is suitable for the analysis of non-linear time series. Decomposition led to four intrinsic mode function (IMF) components and a trend component with different periods. Then, we repeated the same procedure for the growth rate of China’s GDP and obtained four similar IMF components and a trend component. In the second stage, we performed the Granger causality test. The results demonstrated that, in the short run, there was a bidirectional causality relationship between economic growth and energy consumption, and in the long run a unidirectional relationship running from economic growth to energy consumption. View Full-Text
Keywords: energy consumption; ensemble empirical mode decomposition; Granger causality test; China energy consumption; ensemble empirical mode decomposition; Granger causality test; China
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Jiang, L.; Bai, L. Revisiting the Granger Causality Relationship between Energy Consumption and Economic Growth in China: A Multi-Timescale Decomposition Approach. Sustainability 2017, 9, 2299.

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