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Re-evaluating China’s New Energy Demonstration Cities with two-way fixed effects: A comment

Author

Listed:
  • You Wu

    (School of Economics, University of Sheffield, Sheffield S10 2TU, UK)

  • Andrew Burlinson

    (School of Economics, University of Sheffield, Sheffield S10 2TU, UK)

Abstract

China’s New Energy Demonstration City (NEDC) policy aims to address energy and environmental challenges. While two-way fixed effects (TWFE) regression is often used to evaluate such policies within difference-in-differences frameworks, it can lead to incorrect conclusions if unit and time effects are mis-specified. Re-evaluating the impact of the NEDC policy on energy poverty (EP), as studied in Ma et al. (2025), by correctly specifying unit-specific and time-specific effects, we find that: i) the parallel trends assumption fails, and ii) the previously reported impact on EP becomes economically and statistically insignificant. Whether NEDCs reduce EP therefore remains an open question.

Suggested Citation

  • You Wu & Andrew Burlinson, 2026. "Re-evaluating China’s New Energy Demonstration Cities with two-way fixed effects: A comment," Working Papers 2026002, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2026002
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    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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