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The transmission of coal price shock to Chinese industry: Sub-sectors and regions heterogeneity

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  • Lin, Boqiang
  • Lan, Tianxu

Abstract

This study employs the time-varying parameter factor-augmented vector autoregressive model to investigate the transmission dynamics of coal price shocks in China's industrial sectors. Moreover, it delves into the heterogeneous responses of various sub-sectors and diverse provinces to coal price escalations. The principal findings are: (1) The escalation in coal prices manifests a short-term capacity to stimulate investments and industrial output within China's coal sector, thus exhibiting a discernible positive influence on its development. (2) Via the channels of cost transmission, coal price shocks yield short-term adverse repercussions on the output of most industrial segments. (3) The impact of coal price shocks on industrial output is heterogeneous across provinces, which is due to the differences in industrial composition among Chinese provinces. Subsequently, grounded in the derived research insights, this study propounds targeted policy recommendations from the vantage points of fostering industrial advancement.

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  • Lin, Boqiang & Lan, Tianxu, 2025. "The transmission of coal price shock to Chinese industry: Sub-sectors and regions heterogeneity," Energy, Elsevier, vol. 316(C).
    • Handle: RePEc:eee:energy:v:316:y:2025:i:c:s0360544225001136
    DOI: 10.1016/j.energy.2025.134471
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