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Causality between energy and output in the long-run

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  • Stern, David I.
  • Enflo, Kerstin

Abstract

Though there is a very large literature examining whether energy use Granger causes economic output or vice versa, it is fairly inconclusive. Almost all existing studies use relatively short time series, or panels with a relatively small time dimension. We apply Granger causality and cointegration techniques to a Swedish time series dataset spanning 150years to test whether increases in energy use and energy quality have driven economic growth or vice versa. We show that these techniques are very sensitive to variable definition, choice of additional variables in the model, sample periods and size, and the introduction of structural breaks. The relationship between energy and growth may also have changed over time – energy causes output in the full sample while output causes energy use in recent smaller samples. Energy prices have a more robust causal impact on both energy use and output.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 39 (2013)
Issue (Month): C ()
Pages: 135-146

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Handle: RePEc:eee:eneeco:v:39:y:2013:i:c:p:135-146

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Web page: http://www.elsevier.com/locate/eneco

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Keywords: Energy; Macroeconomics; Granger causality; Cointegration; Sweden;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. My Year in Review 2013
    by David Stern in Stochastic Trend on 2013-12-24 04:20:00
  2. Stern and Enflo, Energy Economics
    by David Stern in Stochastic Trend on 2013-05-05 08:17:00
  3. Casuality between Energy and Output in the Long-Run
    by David Stern in Stochastic Trend on 2013-01-21 00:51:00
  4. Elsevier Article Usage Dashboards and Tips for Early Career Researchers
    by noreply@blogger.com (David Stern) in Stochastic Trend on 2014-05-29 03:06:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Bruns, Stephan B. & Gross, Christian, 2013. "What if Energy Time Series are not Independent? Implications for Energy-GDP Causality Analysis," FCN Working Papers 10/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  2. Bahman Kashi, 2014. "Risk Management and the Stated Capital Costs by Independent Power Producers," Development Discussion Papers 2014-03, JDI Executive Programs.
  3. Astrid Kander & David I. Stern, 2013. "Economic Growth and the Transition from Traditional to Modern Energy in Sweden," CAMA Working Papers 2013-65, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Omri, Anis, 2013. "CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models," Energy Economics, Elsevier, vol. 40(C), pages 657-664.
  5. Liam Wagner & Ian Ross & John Foster & Ben Hankamer, 2013. "Tracking global fuel supply, CO2 emissions and sustainable development," Energy Economics and Management Group Working Papers 7-2013, School of Economics, University of Queensland, Australia.
  6. Paresh Narayan & Russell Smyth, 2014. "Applied Econometrics and a Decade of Energy Economics Research," Development Research Unit Working Paper Series 21-14, Monash University, Department of Economics.
  7. Stephan B. Bruns & Christian Gross & David I. Stern, 2013. "Is There Really Granger Causality Between Energy Use and Output?," Crawford School Research Papers 1307, Crawford School of Public Policy, The Australian National University.

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