Study on dynamical relationships between energy consumption, technical progress and economic growth in China

Abstract

Based on the sample of 1978-2010, vector auto regression model of energy consumption, technical progress and economic growth is established. The relationships are empirically analyzed using the method of cointegration test, Granger causality test, impulse response function and variance decomposition. Conclusions are obtained as follows: In the long term, there is a negative correlation between energy consumption and economic growth in China, and technical progress has a significant positive effect on economic growth. In the short term, technical progress, economic growth is the Granger causality of energy consumption. Impulse response of economic growth to energy intensity is firstly positive, and then negative. The impact of technical progress on economic growth is positive, which has an inhibitory effect on energy consumption.