Abstract
This empirical note provides a disaggregated analysis of the causal relationship between fossil fuel consumption and real gross domestic product (GDP) in the US using annual data from 1949 to 2006. The Toda-Yamamoto long-run causality tests reveal the absence of Granger-causality between coal consumption and real GDP; positive unidirectional causality from real GDP to natural gas consumption; and positive unidirectional causality from petroleum consumption to real GDP.
Notes
1In addition to the studies cited on the US, there have been a number of studies examining the relationship between fossil fuel consumption and economic activity in other countries: (CitationHoa [1993] for Thailand, Yang [2000] for Taiwan, Aqeel and Butt [2001] for Pakistan, Fatai et al. [2004] for Australia and New Zealand, Wolde-Rufael [2004] for Shanghai, Lee and Chang [2005] for Taiwan, Yoo [2006a,b] for Korea, Zou and Chau [2006] for China, Zamani [2007] for Iran, Hu and Lin [2008] for Taiwan, Jinke et al. [2008] for China, India, Japan, South Africa, and South Korea, Reynolds and Kolodziej [2008] for the Former Soviet Union, and Yuan et al. [2008] for China). For an exhaustive survey of the international empirical evidence on the causal relationship between energy consumption and economic growth see CitationPayne (2010).
2 CitationFatai et al. (2004), Wolde-Rufael (2004, 2005, 2006), CitationLee (2006), Soytas and Sari (2006, 2010), CitationMehrara (2007), CitationSoytas et al. (2007), CitationSqualli (2007), CitationZachariadis (2007), CitationBowden and Payne (2010), CitationPayne (2009), and CitationPayne and Taylor (2010).
3The test statistics have the standard asymptotic distribution in order to draw valid inferences for the Granger-causality tests.
4Unit root tests are available upon request.
5Results for the real gross fixed capital formation and employment equations are available upon request.
6The Ljung-Box Q-statistics at 24 lags reveal the residuals are free of serial correlation.