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Is There Really Granger Causality Between Energy Use and Output?

Listed author(s):
  • Stephan B. Bruns, Christian Gross and David I. Stern

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.

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Article provided by International Association for Energy Economics in its journal The Energy Journal.

Volume (Year): Volume 35 (2014)
Issue (Month): Number 4 ()
Pages:

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Handle: RePEc:aen:journl:ej35-4-05
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