EconPapers    
Economics at your fingertips  
 

Explaining the (non-) causality between energy and economic growth in the U.S.—A multivariate sectoral analysis

Christian Gross

Energy Economics, 2012, vol. 34, issue 2, 489-499

Abstract: The rapidly growing literature on the relationship between energy consumption and economic growth has not univocally identified the causal relationship yet. We argue that bivariate models, which analyze the causality only at the macro level, are eventually misleading, especially in cases where both variables do not cover the same scope of economic activity. After discussing appropriate pairs of variables, we investigate Granger causality between energy and growth in the U.S. for the period from 1970 to 2007 for three sectors, industry, commercial sector, transport, as well as on the macro level. Using the recently developed ARDL bounds testing approach by Pesaran and Shin (1999) and Pesaran et al. (2001), we find evidence for unidirectional long-run Granger causality in the commercial sector from growth to energy, as well as evidence for bi-directional long-run Granger causality in the transport sector. The dependence of causality on the level of aggregation is interpreted as evidence for ‘Simpsons' Paradox’. The choice of control variables is based on findings from the Environmental Kuznets Curve literature: we find that controlling for the increasing energy productivity of production as well as trade significantly improves the fit of the bivariate model.

Keywords: Energy; Growth; Multivariate ARDL; Granger causality (search for similar items in EconPapers)
JEL-codes: C3 Q4 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988311002957
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Explaining the (non-) causality between energy and economic growth in the U.S. - A multivariate sectoral analysis (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:34:y:2012:i:2:p:489-499

DOI: 10.1016/j.eneco.2011.12.002

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:eneeco:v:34:y:2012:i:2:p:489-499