Multivariate Cointegration Analysis of the Relationship between Electricity Consumption and Economic Growth in China

Many scholars research deeply the relationship between the electricity consumption and GDP. In my view, the composing factors of GDP impact on the electricity consumption in different ways, so the relationship between the electricity consumption and the composing factors of GDP is studied in the paper. Electricity consumption is chosen as the explained variable, and Fixed asset investment, disposal income per capita, export, and electricity power price are chosen as the explanatory variables, twenty-five years (from 1980 to 2004) real data of all the variables (deducted the influence of inflation) in China are taken as the samples. Based on the unit root test and cointegration test, the model is found to analyze the cointegration relationship between the explained variable and explanatory variables, and it is suitable to forecast the electricity demand in long-term. Owing to the existence of equilibrium mechanism, the error correction model is applied to analyze the degree that the short-term electricity consumption deviate the long-term equilibrium state.