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Coal consumption and industrial production nexus in USA: Cointegration with two unknown structural breaks and causality approaches

  • Yildirim, Ertugrul
  • Aslan, Alper
  • Ozturk, Ilhan

The paper investigates the causality relationships among industrial production index, coal consumption and employment in industrial sector for the period of 1973:1–2011:10 in USA. After noticing that there are breaks in the regression model, the Hatemi-J test for cointegration is employed to the cases that take into account two possible regime shifts. It is concluded that there is a long run relationship between industrial production and industrial coal consumption with the breaks at 1983:4 and 1998:4. We found a negative relationship between coal consumption and industrial production for the period of 1973:1–1983:4 and positive relationship for 1983:5–1998:4 period. For the last period that covers 1983:5–2011:10, the cointegration relationship turned to negative. In addition, the results show that causal relationship between coal consumption and industrial production changes over time.

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Article provided by Elsevier in its journal Renewable and Sustainable Energy Reviews.

Volume (Year): 16 (2012)
Issue (Month): 8 ()
Pages: 6123-6127

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Handle: RePEc:eee:rensus:v:16:y:2012:i:8:p:6123-6127
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