Causality Between Energy and Output in the Long-Run
(2013) In Lund Papers in Economic History. General Issues- Abstract
- Though there is a very large literature examining whether energy use Granger causes economic output or vice versa this literature is fairly inconclusive. Almost all existing studies use relatively short time series or panels with a relatively small time dimension. Additionally, many recent papers continue to use what seem to be misspecified models. We apply Granger causality and cointegration techniques to a Swedish time series data set on energy and economic growth spanning 150 years to test whether increases in energy use and energy quality have driven economic growth. We show that these techniques are very sensitive to variable definition, choice of additional variables in the model, and sample periods. All of the following appear to... (More)
- Though there is a very large literature examining whether energy use Granger causes economic output or vice versa this literature is fairly inconclusive. Almost all existing studies use relatively short time series or panels with a relatively small time dimension. Additionally, many recent papers continue to use what seem to be misspecified models. We apply Granger causality and cointegration techniques to a Swedish time series data set on energy and economic growth spanning 150 years to test whether increases in energy use and energy quality have driven economic growth. We show that these techniques are very sensitive to variable definition, choice of additional variables in the model, and sample periods. All of the following appear to make a finding that energy causes growth more likely: using multivariate models, defining variables to better reflect their theoretical definition, using larger samples, and including appropriate structural breaks. However, it is also possible that the relationship between energy and growth has changed over time and that results from recent smaller samples reflect this. Energy prices have a significant causal impact on both energy use and output. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/7869092
- author
- Stern, David LU and Enflo, Kerstin LU
- organization
- publishing date
- 2013
- type
- Working paper/Preprint
- publication status
- published
- subject
- keywords
- time series, causality, cointegration, Granger causality, macroeconomics, Energy
- in
- Lund Papers in Economic History. General Issues
- issue
- 126
- pages
- 43 pages
- publisher
- Department of Economic History, Lund University
- external identifiers
-
- scopus:84878944640
- language
- English
- LU publication?
- yes
- id
- 2d338661-c5ca-41ca-b99a-68b1c639a905 (old id 7869092)
- date added to LUP
- 2016-04-04 10:51:19
- date last changed
- 2022-04-16 02:27:59
@misc{2d338661-c5ca-41ca-b99a-68b1c639a905, abstract = {{Though there is a very large literature examining whether energy use Granger causes economic output or vice versa this literature is fairly inconclusive. Almost all existing studies use relatively short time series or panels with a relatively small time dimension. Additionally, many recent papers continue to use what seem to be misspecified models. We apply Granger causality and cointegration techniques to a Swedish time series data set on energy and economic growth spanning 150 years to test whether increases in energy use and energy quality have driven economic growth. We show that these techniques are very sensitive to variable definition, choice of additional variables in the model, and sample periods. All of the following appear to make a finding that energy causes growth more likely: using multivariate models, defining variables to better reflect their theoretical definition, using larger samples, and including appropriate structural breaks. However, it is also possible that the relationship between energy and growth has changed over time and that results from recent smaller samples reflect this. Energy prices have a significant causal impact on both energy use and output.}}, author = {{Stern, David and Enflo, Kerstin}}, keywords = {{time series; causality; cointegration; Granger causality; macroeconomics; Energy}}, language = {{eng}}, note = {{Working Paper}}, number = {{126}}, publisher = {{Department of Economic History, Lund University}}, series = {{Lund Papers in Economic History. General Issues}}, title = {{Causality Between Energy and Output in the Long-Run}}, url = {{https://lup.lub.lu.se/search/files/5636884/7869102}}, year = {{2013}}, }