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Economic growth drag in the Central China: evidence from a panel analysis


  • Yaobin Liu


This article employs recently developed panel methods to test for unit roots, cointegration and Granger causality to justify and estimate the drag induced by resource constraint and environmental pollution for the Central China. The results of the panel cointegration test show that there is a stable long run relationship amongst total output, capital, labour, land, water and SO 2 when total output is the dependent variable. The results of the causality test with Error Correction Model (ECM) analysis suggest that the available water resource and environmental pollutant have no impacts on total output temporarily, but in the long‐run there is a Granger causality running from these variables to total output, indicating the economic growth drag induced by the natural resource and environmental pollution can be further estimated. Given the stable cointegration and significant Granger causality being, the study shows that the drag on the total output reduces annual economic growth rate by about 1.1 percentage points for the Central China as a whole and there is a significant difference on the aggregated and disaggregated drags for the six provinces, which indicates that natural resource and environmental constraints so far incorporated into production probably have a modest effect over the past 31 years for the Central China.

Suggested Citation

  • Yaobin Liu, 2013. "Economic growth drag in the Central China: evidence from a panel analysis," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2163-2174, June.
  • Handle: RePEc:taf:applec:45:y:2013:i:16:p:2163-2174
    DOI: 10.1080/00036846.2012.654917

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    References listed on IDEAS

    1. Kazuo Ogawa & Kazuyuki Suzuki, 2000. "Uncertainty and Investment: Some Evidence from the Panel Data of Japanese Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 51(2), pages 170-192, June.
    2. Ghosal, Vivek & Loungani, Prakash, 1996. "Product Market Competition and the Impact of Price Uncertainty on Investment: Some Evidence from US Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 217-228, June.
    3. Julián Messina & Giovanna Vallanti, 2007. "Job Flow Dynamics and Firing Restrictions: Evidence from Europe," Economic Journal, Royal Economic Society, vol. 117(521), pages 279-301, June.
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