As an important content of deepening supply-side structural reform

capacity reduction in Hunan province is of great significance to achieve high-quality economic development by exploring the efficiency and policy effect of capacity reduction. In this paper

based on power data in Hunan province

coal

steel

cement and other energy-intensive industries are selected as the research object

and vector autoregressive（ VAR） model is constructed to analyze the effect of various industries under capacity reduction. It is found that the short-term capacity change impact is associated with some degree of shock to the industry

but in the long term it is affected by market clearing and industry cycle

and shock hit effect gradually is absorbed by the market

eventually leading to technological innovation

enterprise reply production and realizing the increase of the revenue and profit. Finally

based on the above research conclusions

relevant policy recommendations are proposed.