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Vector autoregression, cointegration and causality: testing for causes of the British industrial revolution

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  • Les Oxley
  • David Greasley

Abstract

The existence, timing, and possible causes of the British industrial revolution are considered by investigating the time series properties of industrial production and various explanatory variables. Utilising two types of robust cointegration-based causality tests we argue that domestic forces, notably technological progress, shaped the industrial revolution, whereas overseas trade expansion was mainly a consequence of industrial growth. Results from Granger-type VAR tests are contrasted with those of Toda and Phillips (Working paper 91-07, University of Western Australia, 1991b), where the latter manifest some of the potential problems raised by the authors when applied to a data set of this type. An understanding of the possible causes of the first industrial revolution may shed more general light on the forces promoting industrialization and growth. To the extent that the first industrial revolution offers a template, exports appear not to provide a simple pathway to industrialization.

Suggested Citation

  • Les Oxley & David Greasley, 1998. "Vector autoregression, cointegration and causality: testing for causes of the British industrial revolution," Applied Economics, Taylor & Francis Journals, vol. 30(10), pages 1387-1397.
  • Handle: RePEc:taf:applec:v:30:y:1998:i:10:p:1387-1397 DOI: 10.1080/000368498325002
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    Cited by:

    1. Jakob Brochner Madsen, 2016. "Human Accomplishment and Growth in Britain since 1270: The Role of Great Scientists and Education," Monash Economics Working Papers 01-16, Monash University, Department of Economics.
    2. Michaelides, Panayotis G. & Papageorgiou, Theofanis & Vouldis, Angelos T., 2013. "Business cycles and economic crisis in Greece (1960–2011): A long run equilibrium analysis in the Eurozone," Economic Modelling, Elsevier, vol. 31(C), pages 804-816.
    3. Hong Shangqin & Philip McCann & Les Oxley, 2013. "Innovation in New Zealand: issues of firm size, local market size and economic geography," Chapters,in: Handbook of Industry Studies and Economic Geography, chapter 19, pages 459-478 Edward Elgar Publishing.
    4. Chen, Ping-Yu & Chen, Sheng-Tung & Hsu, Chia-Sheng & Chen, Chi-Chung, 2016. "Modeling the global relationships among economic growth, energy consumption and CO2 emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 420-431.
    5. Ghosh, Sajal, 2002. "Electricity consumption and economic growth in India," Energy Policy, Elsevier, vol. 30(2), pages 125-129, January.
    6. Banerjee, Rajabrata, 2011. "The US-UK productivity gap in the twentieth century: a race between technology and population," MPRA Paper 30889, University Library of Munich, Germany.
    7. repec:ula:econom:v:42:y:2017:i:43:p:11-50 is not listed on IDEAS
    8. Pao, Hsiao-Tien & Fu, Hsin-Chia, 2013. "The causal relationship between energy resources and economic growth in Brazil," Energy Policy, Elsevier, vol. 61(C), pages 793-801.
    9. Broadberry, Stephen & Ghosal, Sayantan & Proto, Eugenio, 2017. "Anonymity, efficiency wages and technological progress," Journal of Development Economics, Elsevier, pages 379-394.
    10. Jakob Madsen & James Ang & Rajabrata Banerjee, 2010. "Four centuries of British economic growth: the roles of technology and population," Journal of Economic Growth, Springer, vol. 15(4), pages 263-290, December.
    11. Shanthini, Rajaratnam, 2007. "Fossil fuel based CO2 emissions, economic growth, and world crude oil price nexus in the United States," MPRA Paper 29574, University Library of Munich, Germany, revised 19 Feb 2011.
    12. James B. Ang & Rajabrata Banerjee & Jakob B. Madsen, 2010. "Innovation, Technological Change And The British Agricultural Revolution," CAMA Working Papers 2010-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    13. Rajabrata Banerjee, 2012. "Population Growth and Endogenous Technological Change: Australian Economic Growth in the Long Run," The Economic Record, The Economic Society of Australia, pages 214-228.
    14. David Greasley & Les Oxley, 2010. "Cliometrics And Time Series Econometrics: Some Theory And Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 970-1042, December.
    15. Altinay, Galip & Karagol, Erdal, 2005. "Electricity consumption and economic growth: Evidence from Turkey," Energy Economics, Elsevier, pages 849-856.
    16. Ongono, Patrice, 2009. "Consommation d'énergie et performances économiques au Cameroun
      [Energy consumption and economic performance in Cameroon]
      ," MPRA Paper 23525, University Library of Munich, Germany.
    17. Ana María Cuadros Ramos, 2000. "Exportaciones y crecimiento económico: Un análisis de causalidad para México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 15(1), pages 37-64.
    18. Shankar Prasad Acharya, 2009. "Verification of Causality through VAR and Intervention Analysis: Econometric Modeling on Budget Deficit and Trade Deficit in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 21, pages 1-1, April.
    19. Pao, Hsiao-Tien, 2009. "Forecast of electricity consumption and economic growth in Taiwan by state space modeling," Energy, Elsevier, vol. 34(11), pages 1779-1791.
    20. Fatai, K & Oxley, Les & Scrimgeour, F.G, 2004. "Modelling the causal relationship between energy consumption and GDP in New Zealand, Australia, India, Indonesia, The Philippines and Thailand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 64(3), pages 431-445.
    21. David I. Stern, 2011. "From Correlation to Granger Causality," Crawford School Research Papers 1113, Crawford School of Public Policy, The Australian National University.
    22. Lai, T.M. & To, W.M. & Lo, W.C. & Choy, Y.S. & Lam, K.H., 2011. "The causal relationship between electricity consumption and economic growth in a Gaming and Tourism Center: The case of Macao SAR, the People’s Republic of China," Energy, Elsevier, vol. 36(2), pages 1134-1142.

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