Linear and nonlinear causal relationship between energy consumption and economic growth in China: New evidence based on wavelet analysis

Abstract

The energy-growth nexus has important policy implications for economic development. The results from many past studies that investigated the causality direction of this nexus can lead to misleading policy guidance. Using data on China from 1953 to 2013, this study shows that an application of causality test on the time series of energy consumption and national output has masked a lot of information. The Toda-Yamamoto test with bootstrapped critical values and the newly proposed non-linear causality test reveal no causal relationship. However, a further application of these tests using series in different time-frequency domain obtained from wavelet decomposition indicates that while energy consumption Granger causes economic growth in the short run, the reverse is true in the medium term. A bidirectional causal relationship is found for the long run. This approach has proven to be superior in unveiling information on the energy-growth nexus that are useful for policy planning over different time horizons.

The causal nexus between energy consumption, carbon emissions and economic growth: New evidence from China, India and G7 countries using convergent cross mapping

“…For example, if economic growth does not rely on energy consumption, as specified by the conservation hypothesis (see Kraft and Kraft [4], Menegaki [5] and Rahman and Kashem [6]), then decarbonization-oriented energy conservation policies can be promoted to reduce carbon emissions without worrying about any significant negative effect on economic growth. However, if the energy-economic nexus is consistent with the growth hypothesis (see Yu and Choi [7], Appiah [8], Cai, Sam [9] and Ha, Tan [10]), reducing energy usage may hamper economic growth, which means that policymakers must face the “environment or economy” dilemma. In these cases, alternative energy policies must be designed.…”

Geometrical Information Flow Regulated by Time Lengths: An Initial Approach

“…However, the results points for a perfect prediction for small periods of time, it confirms time as a factor that disrupts predictability regarding behavior of variables rather than potential information entropy [16]. When considering this thesis as a confirmation of the fact that thermodynamics concept given by Shannon [32] assumes, for these results of forecasting, the small effect in which each binary based interaction event tend to give several unpredictable outcomes due to diversity of pathways, but, nonetheless, those features are time regulated [3,4,9,11,13,16,19,22,28,30,31,[33][34][35][36][37][38], and phenomena of this kind are promoted by the flow of sequences among one unit to another one, composing the whole system as far as it has enough time to express its potential phase spaces.…”

“…What if a duality based phenomena or other chaotic systems can be sustained by binary based events and have regulations caused by time lengths? [3,4,9,11,13,16,22,28,30,31] The intervention at binary based thermodynamics scope is obtained as far as its expressions can be time regulated and dependent on the specific internal logic of variables interacting within the system, and it means by axiomatic reasons, making it possible to dismantle (control) the binary valued orientation output of interactions in terms of flow directionality for multiple variable based events. Figure 19, a constant reduction of information flow until it reaches 0 (zero for both variables interaction).…”

“…The transfer of entropy among different samples could be described by appropriate methods in the previous condition adopted in this article example. Also, the proposed model analyzed gives a general view of binary system functioning for realistic events, system main concepts that organizes the events (iteration, frequency, and time regulations), a model for information theory analysis, probabilistic system analysis, empirical experiments analogous to the example given in this article, information entropy flows, and specific researches to be carried out in future time, such as: -microorganism's reproduction flow [33], infection speed [34]; -vector based diseases [35]; -expenditures management and analysis of massive administrative units (agents) [2,28]; -water and electrical energy distribution over massive administration units commonly found in public administration of cities or countries [11,28,31]; -theoretical and empirical model for resource distribution considering containment, reduction, or regulation of resources production Vs consumption [11,13]; -logistics aspects of administration and commerce flow [36]; -mathematical model for entropy, geometry, and time regulations for nonlinear dynamic events [16,21]; -engineering of materials [37]; -civil engineering or related areas [3,4,6,7]; -language processing regarding space and time accelerations or other biological aspects [22]; -metaphysical concepts for physical and mathematical investigations regarding iteration, frequency and time [15,20]; -deterministic to chaos event's investigations [21,37]; -duality based and quantum based phenomena, such as economics and particles and other fields of knowledge related to the issue [30]; and, -computing, networking, and communications [38].…”

“…The example that is described in this article illustrates situations that are present when large numbers of public management agents regarding the administrative and financial scope for several types of provisioning services are considered to achieve the best optimal solution for distribution, containment, or reduction of resource consumed. However, methods considering the linearity constant among variables that compose the expenditure systems might fall into false results, due to oscillations present in the system and information flow's frequency and time aspects [28,29]. In this way it is possible to use the results of analysis in maximum entropies of information on identical systems as an indicator of how to operate the system's variables.…”