Investigating economic growth-energy consumption-environmental degradation nexus in China

The impact of energy consumption and its relationship with macroeconomic variables is always the concern of policy authorities. In this paper, we conduct empirical analyses on testing the inter-relationship between energy consumption with economic growth (GDP) and environmental degradation (greenhouse gases emissions). Our main objective is to indicate the direction of causal (uni-directional or bi-directional) relationship on these variables and the dynamic of the relationship (symmetric or asymmetric and permanent or temporary). The Granger causality tests and cointegration tests (linear versus threshold) are applied. Our results reveal bi-directional relation between energy consumption and greenhouse gases emissions and uni-directional causal effect from GDP to energy consumption in the shortrun. Our threshold cointegration test reveals long-run asymmetric causal effect from energy consumption and greenhouse gases emissions to GDP while the linear cointegration tests detect symmetric long-run relationship in the model with energy consumption and greenhouse gases emissions as dependent variable respectively. (C) 2017 The Authors. Published by IASE.