A Granger Causality Analysis of China's Energy-Growth Nexus

Abstract: This paper discusses the subject of economic growth and energy usage, focusing on a singular renewable energy source. The aim is to investigate the causal relationship between hydropower consumption and economic growth in China over the period 1965-2021. To achieve the aim of the study, the Toda-Yamamoto method for the Granger causality test was deployed. The result reports an absence of statistical significance between hydropower consumption and economic growth. The finding implies that no causality is present. Given this finding, it is arguable that hydropower energy consumption cannot be considered as a driving force for enhancing economic growth in China.