Journal
RENEWABLE & SUSTAINABLE ENERGY REVIEWS
Volume 15, Issue 6, Pages 2984-2989Publisher
PERGAMON-ELSEVIER SCIENCE LTD
DOI: 10.1016/j.rser.2011.03.026
Keywords
Elasticity of energy consumption; Sustainable development; Genuine savings; Structural vector autoregression; Generalized impulse response
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This paper employs the structural vector autoregressions framework and the generalized impulse response function to study the long-term dynamic relation between China's energy consumption and sustainable economic growth. In addition to the conventional economic indicators (GDP growth rates), genuine savings rates are particularly examined to indicate sustainable economic development. Results show that the high elasticity of energy consumption dramatically undermines the capacity of China's sustainability in terms of reducing genuine savings rates. We also use variance decomposition to calculate relative variance contribution rates, in order to identify the most important factor affecting GDP growth as well as genuine savings rates. The analysis finds that clean and renewable energy increase the country's genuine savings significantly. That is, renewable energy consumption promotes sustainable development for both natural and economic societies. However, increase in traditional solid energy consumption is more likely to benefit only the growth of GDP. (C) 2011 Elsevier Ltd. All rights reserved.
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