| Summary/Abstract |
This paper considers bubbles specific to Chinese renewable energy industries, including wind, solar and hydro through the Generalized Supremum Augmented Dickey-Fuller test. It applies the recursive procedure and cross-time occurrence to identify starting and ending points in each bubble. Combining with the bubble model, the empirical results reveal that renewable energy industrial stock price may deviate from their market value, and bubble behaviours exist in these industries. The potential reasons can be contributed to economic growth, trade barrier, government supportive policies, global financial crisis, and environmental protection pressure. More attention is further paid on special factors such as extreme windy weather, unfair anti-dumping investigation and less policy support which can explain certain bubbles in wind, solar and hydro industries. The renewable energy industries' boom and recession that evidence from bubble behaviour, would harm industrial development, influence thousands of people's lives, and bring challenges for Chinese energy structure and policies. Therefore, depending on the timely identification of explosive behaviours and bubbles, policymakers could set up prudent policy framework, reduce government intervention and render firms autonomy to maintain the sustained and healthy development of industries. More importantly, enterprises should increase research and development expenditure, upgrade technical standard and exploit international renewable energy market.
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