Direct and economy-wide energy rebound effects in China's transportation sector: a comparative analysis

Although the existing literature has evaluated the energy rebound effect (ERE) from various aspects, the estimates of different types of ERE obtained by different methods still deserve further discussion. For this reason, by analyzing the pros and cons of assessment methods, this study offers a comparison between the direct and economy-wide EREs based on China's transportation sector during the period of 2003-2019. Specifically, on the basis of the translog cost function, we use the dynamic ordinary least square (DOLS) method with seemingly unrelated regression (SUR) to evaluate the sectoral direct ERE. Considering that the direct ERE estimation is limited by its strict assumptions, this article further assesses the sectoral ERE from a macro perspective. By constructing the dynamic two-stage panel function, the generalized method of moments (GMM) was adopted to estimate the sectoral economy-wide ERE. The empirical results demonstrate that first, capital and labor relative to energy are Morishima substitutes; second, the sectoral short-term economy-wide ERE in China was 71.60%, while the long-term economy-wide ERE was 32.00% during the study period; third, there are significant regional differences in the EREs of Chinese transportation industry both for the short and long term, and the east China demonstrated the highest sectoral economy-wide ERE.