Is There Really Granger Causality Between Energy Use and Output?
Christian Gross and
David Stern ()
No 11/2013, FCN Working Papers from E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)
We carry out a meta-analysis of the very large literature on testing for Granger causality 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 or misspecification bias. Our model extends the standard meta-regression model for detecting genuine effects in the presence of publication biases using the statistical power trace by controlling for the tendency to over-fit vector autoregression models in small samples. Granger causality tests in these over-fitted models have inflated type I errors. We cannot find a genuine causal effect in the literature as a whole. However, there is a robust genuine effect from output to energy use when energy prices are controlled for.
JEL-codes: C32 C52 Q43 (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:ris:fcnwpa:2013_011
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