Income inequality and natural gas consumption in China: Do heterogeneous and threshold effects exist?

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Abstract
To test whether income inequality affects natural gas consumption in China, this study investigates the causal nexus between income inequality and natural gas consumption based on panel data of China's 30 provinces from 2005 to 2017. Fully considering the potential cross‐sectional dependence and endogeneity issues, the system generalised method of moments (SYS‐GMM) is selected as the benchmark estimation approach. Furthermore, the threshold effect and regional heterogeneity are further analysed. The results indicate that the impact of income inequality on natural gas consumption depends on the level of economic development in China; specifically, a significant inverted U‐shaped relationship is found between income inequality and natural gas consumption. Notably, at the current stage of economic development, income inequality has a significant and negative influence on natural gas consumption. Furthermore, the causality analysis for the three major regions in the country confirms the existence of significant regional differences, revealing that, only for the central region, unidirectional causality runs from natural gas consumption to income inequality.
Funding Information
  • National Social Science Fund of China (18VDL017)

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