Is There Really Granger Causality Between Energy Use and Output?
Christian Gross () and
David Stern ()
Crawford School Research Papers from Crawford School of Public Policy, The Australian National University
We carry out a meta-analysis of the very large literature on Granger causality tests between energy use and economic output to determine if there is a genuine effect in this literature or whether the large number of apparently significant results is due to publication and misspecification bias. Our model extends the standard meta-regression model for detecting genuine effects using the statistical power trace in the presence of publication biases by controlling for the tendency to over-fit vector auto regression models in small samples. These over-fitted models have inflated type 1 errors. We find that models that include energy prices as a control variable find a genuine effect from output to energy use in the long-run. A genuine causal effect also seems apparent from energy to output when employment is controlled for and the Johansen procedure is used.
JEL-codes: Q43 C32 C52 (search for similar items in EconPapers)
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Journal Article: Is There Really Granger Causality Between Energy Use and Output? (2014)
Working Paper: Is There Really Granger Causality Between Energy Use and Output? (2013)
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Persistent link: http://EconPapers.repec.org/RePEc:een:crwfrp:1307
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