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Energy Use, Income and Carbon Dioxide Emissions: Direct and Multi-Horizon Causality in Canada

  • Patrick Withey

    (Department of Economics, St. Francis Xavier University, PO 5000, Antigonish, NS, B2G 2W5, Canada .)

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    This paper explores the causal relationship between energy, emissions and income in Canada for the period 1960- 2005. This study explores these relationships using the Toda Yamamoto approach in a multivariate framework including labour and capital as auxiliary variables. We also test the hypothesis of indirect or multi-horizon Granger non-causality between these variables, since causal effects may occur more than one-period-ahead, as is assumed by the standard Granger non-causality test. We find that there is bi-directional direct causality between income and energy use in Canada, and no other channels of causality between the three variables. However, indirect Granger non- causality testing shows that there is bi-directional causality between all variables in the system. This result is contrary to other results in the literature, and has different implications for energy and environmental policy.

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    Article provided by Econjournals in its journal International Journal of Energy Economics and Policy.

    Volume (Year): 4 (2014)
    Issue (Month): 2 ()
    Pages: 178-188

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    Handle: RePEc:eco:journ2:2014-02-8
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