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Energy Systems
Published in: Energy Systems 4/2017

01-10-2015 | Original Paper

Power supply, coal price, and economic growth in China

Authors: Ma-lin Song, Hang Song, Jia-jia Zhao, Jian-lin Wang

Published in: Energy Systems | Issue 4/2017

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Abstract

In this paper, we develop a coal–electricity vertical price transmission model for analyzing the relationships between power supply, coal price, and economic growth. We empirically test the model using data from 1996 to 2011. The results suggest that there is a long-run equilibrium relationship between power supply, coal price, and economic growth. Power shortages represent departures from this long-run equilibrium relationship. Applying a bootstrapped Granger causality test, we find unidirectional Granger causality from power supply to economic growth and from coal price to power supply, and bidirectional Granger causality between coal price and economic growth. We also discuss policy implications suggested by these results, including monitoring coal price fluctuations, perfecting the coal–electricity price linking system, and breaking the administrative monopoly in China’s electricity market.
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Footnotes
1
The power supply is equal to power consumption because power cannot be stored. In order to facilitate the theoretical analysis, we prefer to refer to the power supply.
 
2
FOB means “freight on board”; it includes coal price plus the price of the services for loading coal onto the ship.
 
3
When the power market is a perfect monopoly, \(\textit{HHI}=1\) ; as the power market tends towards perfect competition, \(\textit{HHI}\rightarrow 0\) In order to avoid negative prices, assume that \(e>\eta +(1-\eta )\textit{HHI}\).
 
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Metadata
Title
Power supply, coal price, and economic growth in China
Authors
Ma-lin Song
Hang Song
Jia-jia Zhao
Jian-lin Wang
Publication date
01-10-2015
Publisher
Springer Berlin Heidelberg
Published in
Energy Systems / Issue 4/2017
Print ISSN: 1868-3967
Electronic ISSN: 1868-3975
DOI
https://doi.org/10.1007/s12667-015-0167-3

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