View article

Unlike previous energy consumption-economic growth studies, this study examines the relationship among energy consumption, economic growth, employment and gross fixed capital formation for 17 highly developed OECD countries by employing both the Toda–Yamamoto procedure which based on asymptotic critical values and the bootstrap-corrected causality test, since non-normality of the error term harms the validity of the Toda–Yamamoto procedure. This study finds that there is very small bias due to the assumption of normality. Furthermore using different information criterions, importance of lag length is tested. Findings indicate that selection of lag length is important for Denmark, Ireland, Norway and Spain. It is concluded that while there exists uni-directional causality running from energy consumption to real GDP for Japan, bi-directional causality is found for Italy, New Zealand, Norway and Spain. On …