Empirical analysis of the relationship between energy consumption and economic growth in China

With the high-speed development of economy, China has a growing demand for energy with each passing day. As problems of rising oil prices and global warming become more prominent, China as the world's second-biggest energy consumer, has to deal with the relationship between energy consumption and economic growth. The purpose of this study is to employ generalized method of moments to estimate the panel data model and investigates the causality relationship between economic growth and energy consumption in China considering differences among provinces. It employs annual data covering the period of 1994-2008. The empirical results show that there exists bidirectional causality between energy consumption and economic growth.