Energy use and output growth in Canada: a multivariate cointegration analysis [An article from: Energy Economics]

This digital document is a journal article from Energy Economics, published by Elsevier in 2004. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
Using a neo-classical one-sector aggregate production technology where capital, labor and energy are treated as separate inputs, this paper develops a vector error-correction (VEC) model to test for the existence and direction of causality between output growth and energy use in Canada. Using the Johansen cointegration technique, the empirical findings indicate that the long-run movements of output, labor, capital and energy use in Canada are related by two cointegrating vectors. Then using a VEC specification, the short-run dynamics of the variables indicate that Granger-causality is running in both directions between output growth and energy use. Hence, an important policy implication of the analysis is that energy can be considered as a limiting factor to output growth in Canada.