Economic growth and energy consumption causal nexus viewed through a bootstrap rolling window.pdfVIP

Energy Economics 32 (2010) 1398–1410 Contents lists available at ScienceDirect Energy Economics j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / e n e c o Economic growth and energy consumption causal nexus viewed through a bootstrap rolling window Mehmet Balcilar a,1, Zeynel Abidin Ozdemir b,?, Yalcin Arslanturk c,2 a Department of Economics, Eastern Mediterranean University, Famagusta, Turkish Republic of Northern Cyprus, via Mersin 10, Turkey b Department of Economics, Gazi University, Besevler, 06500, Ankara, Turkey c Gazi University, Teknikokullar, 06500, Ankara, Turkey article info Article history: Received 20 December 2009 Received in revised form 17 May 2010 Accepted 29 May 2010 Available online 4 June 2010 JEL classi?cations: C22 Q43 Q48 Keywords: Economic growth Energy consumption Bootstrap Time-varying causality abstract One puzzling results in the literature on energy consumption-economic growth causality is the variability of results particularly across sample periods, sample sizes, and model speci?cation. In order overcome these issues this paper analyzes the causal links between energy consumption and economic growth for G-7 countries using bootstrap Granger non-causality tests with ?xed size rolling subsamples. The data used includes annual total energy consumption and real Gross Domestic Product (GDP) series from 1960 to 2006 for G-7 countries, excluding Germany, for which the sample period starts from 1971. Using the full sample bootstrap Granger causality test, we ?nd that there is predictive power from energy consumption to economic growth only for Canada. However, parameter instability tests show that none of the estimated models have constant parameters and hence the full sample results are not reliable. Analogous to the full sample results, the results obtained from the bootstrap rolling window estimation indicate no consistent causal links between energy consumption and economic growth. We, however, ?nd that causal