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An Empirical Investigation on the Relationship between Carbon Emission and Regional Economic Growth

Song Zhi-Hong, Mao Heng-Chuang, Lee Dong-Mei

Abstract: The paper empirically investigated the relationship between GDP and carbon emissions in Shanxi Province, P. R. China, from 1998 to 2012. Firstly, the unit root test and co-integration test are carried out for the two time series, and the co-integration equations are obtained. Then the Granger causality test was carried out, and it is found that when the lag order is 3, the carbon emissions of Shanxi Province is the Granger cause of GDP, while GDP is not the Granger cause of carbon emissions. The conclusion of the study shows that energy consumption in Shanxi Province still brings obvious economic benefits. The economic development of Shanxi Province has not caused a significant increase in carbon emissions in the past 15 years, which may be due to the preliminary effect of the economic transformation of Shanxi Province in recent years. This is consistent with the result that the carbon emission per unit GDP of Shanxi Province shows a downward trend in the past 15 years. Finally, it is put forward that active adjustment of energy structure, development of renewable energy, implementation of technological innovation, optimization of industrial structure and reasonable government intervention are effective measures for sustainable regional economic growth.
Keywords: carbon emissions / GDP / Shanxi Province / structure / Granger / optimization

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