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Economic Growth, Foreign Direct Investment and CO 2 Emissions in China: A Panel Granger Causality Analysis

Author

Listed:
  • Hongfeng Peng

    (School of Economics and Management, Wuhan University, Wuhan 430072, Hubei Province, China
    These authors contributed equally to this work.)

  • Xiaoyu Tan

    (School of Economics and Management, Wuhan University, Wuhan 430072, Hubei Province, China
    These authors contributed equally to this work.)

  • Yanli Li

    (School of Economics and Management, Wuhan University, Wuhan 430072, Hubei Province, China
    These authors contributed equally to this work.)

  • Liqin Hu

    (School of Economics and Management, Wuhan University, Wuhan 430072, Hubei Province, China
    These authors contributed equally to this work.)

Abstract

Using a sample of province-level panel data, this paper investigates the Granger causality associations among economic growth (GDP), foreign direct investment (FDI) and CO 2 emissions in China. By applying the bootstrap Granger panel causality approach (Kónya, 2006), we consider both cross-sectional dependence and homogeneity of different regions in China. The empirical results support that the causality direction not only works in a single direction either from GDP to FDI (in Yunnan) or from FDI to GDP (in Beijing, Neimenggu, Jilin, Shanxi and Gansu), but it also works in both directions (in Henan). Moreover, we document that GDP is Granger-causing CO 2 emissions in Neimenggu, Hubei, Guangxi and Gansu while there is bidirectional causality between these two variables in Shanxi. In the end, we identify the unidirectional causality from FDI to CO 2 emissions in Beijing, Henan, Guizhou and Shanxi, and the bidirectional causality between FDI and CO 2 emissions in Neimenggu.

Suggested Citation

  • Hongfeng Peng & Xiaoyu Tan & Yanli Li & Liqin Hu, 2016. "Economic Growth, Foreign Direct Investment and CO 2 Emissions in China: A Panel Granger Causality Analysis," Sustainability, MDPI, vol. 8(3), pages 1-13, March.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:3:p:233-:d:64952
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