critical analysis of economic journal article topic: energy and economic growth nexus

  Criticaly analyze of the document. Analysis should definetly include the following: -explanation of methodology used in the journal- do they make sense? - are the results conclusive and match charts and tables - did the authors leave important facts (e.g. variables) out Analysis Energy consumption, carbon emissions, and economic growth in China Xing-Ping Zhang ⁎, Xiao-Mei Cheng School of Business & Administration, North China Electric Power University, Beijing, 102206, China a r t i c l e i n f o a b s t r a c t Article history: Received 9 March 2009 Received in revised form 19 May 2009 Accepted 19 May 2009 Available online 12 June 2009 Keywords: Carbon dioxide emission Economic growth Energy consumption Granger causality Generalized impulse response function This paper investigates the existence and direction of Granger causality between economic growth, energy consumption, and carbon emissions in China, applying a multivariate model of economic growth, energy use, carbon emissions, capital and urban population. Empirical results for China over the period 1960–2007 suggest a unidirectional Granger causality running from GDP to energy consumption, and a unidirectional Granger causality running from energy consumption to carbon emissions in the long run. Evidence shows that neither carbon emissions nor energy consumption leads economic growth. Therefore, the government of China can purse conservative energy policy and carbon emissions reduction policy in the long run without impeding economic growth. © 2009 Elsevier B.V. All rights reserved. 1. Introduction Global warming has been one of the most important environmental problems of our ages. The ever increasing amount of carbon dioxide (CO2), the dominant contributor to the greenhouse effect, seems to be aggravating this problem. Academics and practitioner alike have been debating about reducing greenhouse gas (GHG) emissions to alleviate global warming. There seems to be basically three research strands in literature on the relationship between economic growth and environmental pollutants. The first strand focuses on the environmental pollutants and economic growth nexus. It is closely related to testing the validity of the so-called environmental Kuznets curve (EKC) hypothesis, which postulates an inverted U-shaped relationship between the level of environmental degradation and income growth. That is to say, environmental degradation increases with per capita income during the early stages of economic growth, and then declines with per capita income after arriving at a threshold. Ever since the original empirical study of Grossman and Krueger (1991), an increasing body of literature has tested the economic growth and environmental pollution nexus.1 However, the empirical results appear to be controversial. The EKC model is severely criticized for lack of feedback from environmental pollutants to economic output as income is assumed to be an exogenous variable (see Arrow et al., 1995; Stern, 2004; Hung and Shaw, 2002; among others). Hill and Magnani (2002), Stern (2004), and Dinda (2004) provided extensive reviews of this EKC research. The second strand concentrates on the link between economic output and energy consumption, since the emissions are mainly caused by burning fossil fuels. Following the seminal study of Kraft and Kraft (1978), an increasing number of studies has assessed the empirical evidence employing Granger causality and cointegration model. The earlier studies mostly apply a bivariate model and fail to get consensus results. The bivariate model is criticized in many econometric issues, especially the omitted variables bias. Stern (1993) argued that bivariate tests may fail to detect causality because of the substitution effects that may occur between energy and other inputs. Employing a multivariate model with energy consumption, gross domestic product (GDP), capital, and labor force, Stern (1993) found Granger causality running from energy use to GDP for the USA. Following Stern (1993), a considerable number of studies2 has tested the causal relationship between the energy consumption and economic output in a multivariate context. However, the multivariate studies also produce conflicting results. Huang et al. (2008) provided a good review on the empirical results from causality tests. An assessment of the existing literature indicates that most studies focus onthe nexus of output-energy or output-pollution.Only recently, a combined approach of those two methods has emerged which is implied to investigate the inter-temporal links in the energy–environment– incomenexus. Appling amultivariatemodelwith income, energy Ecological Economics 68 (2009) 2706–2712 ⁎ Corresponding author. School of Business & Administration, North China Electric Power University, Beinong Road 2, Changping District, Beijing, 102206, China. Tel.: +86 10 80798537. E-mail address: [email protected] (X.-P. Zhang). 1 See, e.g. de Bruyn and Opschoor (1997), Unruh and Moomaw (1998), Heil and Selden (1999), Taskin and Zaim (2000), Friedl and Getzner (2003), Coondoo and Dinda (2008), and Managi and Jena (2008). 2 See, e.g., Masih and Masih (1998);Asafu-Adjaye (2000);Stern (2000);Ghali and El- Sakka (2004);Oh and Lee (2004); Lee (2005). 0921-8009/$ – see front matter © 2009 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2009.05.011 Contents lists available at ScienceDirect Ecological Economics journal homepage: www. e lsevi e r.com/locate/ecolecon