Asymmetric adjustment of the dynamic relationship between energy intensity and urbanization in China
AbstractThis paper provides a comprehensive nonlinear analysis of asymmetric adjustment of the dynamic relationship between energy intensity and urbanization using the time series data of 1978–2010 in China at both the national and the macro regional levels. Two sets of unit root tests are applied first to check whether the variables of energy intensity and urbanization are heterogeneous with and without structural breaks, respectively. Cointegration tests are then applied to determine whether long-term relationships are present when structural breaks are or aren't accounted for. The asymmetric adjustment analyses are finally applied to examine how the variables in time-series respond to the deviations from the equilibrium through an integration of threshold vector error correction model (TVECM), and to examine how they respond to the co-existence of TVECM and the threshold. The findings of the systematic tests and analyses confirm the existence of non-linear causal relationships between the energy intensity and urbanization in China. Energy intensity has an asymmetric adjusting effect to urbanization in the whole country and the Central belt. An asymmetric adjustment running from the energy intensity to urbanization is also identified when structural breaks are accounted for, which occurred in 1988, 1993, 2000 and 2006. Furthermore, the two-regime threshold vector error correction model shows that the adjustment process of the energy intensity toward equilibrium is highly persistent when a threshold is reached. There exists a mean-reverting behavior, indicating that the energy intensity grows faster than the urbanization in China when the threshold is reached.
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Bibliographic InfoArticle provided by Elsevier in its journal Energy Economics.
Volume (Year): 36 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/eneco
Energy intensity; Urbanization; Threshold cointegration; Structural breaks; Asymmetric adjustment;
Find related papers by JEL classification:
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
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