Is There Really Granger Causality between Energy Use and Output?

49 Pages Posted: 15 Mar 2013 Last revised: 21 Apr 2013

See all articles by Stephan Bruns

Stephan Bruns

University of Kassel - Meta-Research in Economics Group

Christian Gross

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

David I. Stern

Australian National University (ANU) - Crawford School of Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: March 8, 2013

Abstract

We carry out a meta-analysis of the very large literature on Granger causality tests 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 and misspecification bias. Our model extends the standard meta-regression model for detecting genuine effects using the statistical power trace in the presence of publication biases by controlling for the tendency to over-fit vector auto regression models in small samples. These over-fitted models have inflated type 1 errors. We find that models that include energy prices as a control variable find a genuine effect from output to energy use in the long-run. A genuine causal effect also seems apparent from energy to output when employment is controlled for and the Johansen procedure is used.

JEL Classification: Q43, C32, C52

Suggested Citation

Bruns, Stephan and Gross, Christian and Stern, David I., Is There Really Granger Causality between Energy Use and Output? (March 8, 2013). Crawford School Research Paper No. 13-07. Available at SSRN: https://ssrn.com/abstract=2232455 or http://dx.doi.org/10.2139/ssrn.2232455

Stephan Bruns

University of Kassel - Meta-Research in Economics Group ( email )

Nora-Platiel-Str. 5
Kassel
Germany

Christian Gross

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany

David I. Stern (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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