Sustainable economic development in China: Modelling the role of hydroelectricity consumption in a multivariate framework

This paper examines the relationship between hydroelectricity consumption and economic growth in China, while controlling for fossil fuel consumption, financial development, capital, institutional quality and globalization and its components for the period, 1970-2014. We have employed the Bayer and Hanck, (2013) combined cointegration test to examine the long-run relationships between those variables as well as the autoregressive distributed lag method with structural breaks as a robustness check. The empirical findings demonstrate a long-run relationship between those variables. Hydroelectricity consumption, fossil fuel consumption, capital, financial development and globalization and its components have a positive influence on GDP in China. The findings also provide predominant evidence on the long-run feedback hypothesis between the variables. The findings suggest that policies should be implemented to increase the role hydropower in the energy mix for sustainable economic growth in the country. (C) 2018 Elsevier Ltd. All rights reserved.