Coal consumption and industrial production nexus in USA: Cointegration with two unknown structural breaks and causality approaches

Coal consumption and industrial production nexus in USA: Cointegration with two unknown... The paper investigates the causality relationships among industrial production index, coal consumption and employment in industrial sector for the period of 1973:1–2011:10 in USA. After noticing that there are breaks in the regression model, the Hatemi-J test for cointegration is employed to the cases that take into account two possible regime shifts. It is concluded that there is a long run relationship between industrial production and industrial coal consumption with the breaks at 1983:4 and 1998:4. We found a negative relationship between coal consumption and industrial production for the period of 1973:1–1983:4 and positive relationship for 1983:5–1998:4 period. For the last period that covers 1983:5–2011:10, the cointegration relationship turned to negative. In addition, the results show that causal relationship between coal consumption and industrial production changes over time. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Renewable and Sustainable Energy Reviews Elsevier

Coal consumption and industrial production nexus in USA: Cointegration with two unknown structural breaks and causality approaches

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Publisher
Elsevier
Copyright
Copyright © 2012 Elsevier Ltd
ISSN
1364-0321
D.O.I.
10.1016/j.rser.2012.07.002
Publisher site
See Article on Publisher Site

Abstract

The paper investigates the causality relationships among industrial production index, coal consumption and employment in industrial sector for the period of 1973:1–2011:10 in USA. After noticing that there are breaks in the regression model, the Hatemi-J test for cointegration is employed to the cases that take into account two possible regime shifts. It is concluded that there is a long run relationship between industrial production and industrial coal consumption with the breaks at 1983:4 and 1998:4. We found a negative relationship between coal consumption and industrial production for the period of 1973:1–1983:4 and positive relationship for 1983:5–1998:4 period. For the last period that covers 1983:5–2011:10, the cointegration relationship turned to negative. In addition, the results show that causal relationship between coal consumption and industrial production changes over time.

Journal

Renewable and Sustainable Energy ReviewsElsevier

Published: Oct 1, 2012

References

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