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The causal relationship between U.S. energy consumption and real output: A disaggregated analysis

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  • Bowden, Nicholas
  • Payne, James E.

Abstract

This study utilizes U.S. annual data from 1949 to 2006 to examine the causal relationship between energy consumption and real GDP using aggregate and sectoral primary energy consumption measures within a multivariate framework. The Toda-Yamamoto long-run causality tests reveal that the relationship between energy consumption and real GDP is not uniform across sectors. Granger-causality is absent between total and transportation primary energy consumption and real GDP, respectively. Bidirectional Granger-causality is present between commercial and residential primary energy consumption and real GDP, respectively. Finally, the results indicate that industrial primary energy consumption Granger-causes real GDP. The results suggest that prudent energy and environmental policies should recognize the differences in the relationship between energy consumption and real GDP by sector.

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  • Bowden, Nicholas & Payne, James E., 2009. "The causal relationship between U.S. energy consumption and real output: A disaggregated analysis," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 180-188.
    • Handle: RePEc:eee:jpolmo:v:31:y:2009:i:2:p:180-188
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