energy consumption and economic growth nexus in tanzania an ardl bounds testing approach abstract in this paper we examine the intertemporal causal relationship between energy consumption and economic growth in tanzania during the period of 1971 2006 unlike the majority of the previous studies we employ the newly developed autoregressive distributed lag ardl bounds testing approach by pesaran et al 2001 bounds testing approaches to the analysis of level relationships journal of applied econometrics 16 289 326 to examine this linkage we also use two proxies of energy consumption namely total energy consumption per capita and electricity consumption per capita the results of the bounds test show that there is a stable long run relationship between each of the proxies of energy consumption and economic growth the results of the causality test on the other hand show that there is a unidirectional causal flow from total energy consumption to economic growth and a prima facie causal flow from electricity consumption to economic growth overall the study finds that energy consumption spurs economic growth in tanzania

liquidity constraints and labor supply abstract in this paper we shed some light on how restrictions in financial markets the so called liquidity constraints might act in affecting labour supply decisions of italian workers one way to neutralize the existence of binding liquidity constraints is simply by supplying additional labor instead of reducing consumption we estimate whether resorting to additional labor supply as a smoothing consumption device is at work by using the italian survey of households income and wealth shiw the longitudinal dimension of the shiw dataset allows us to control for individual unobserved heterogeneity we also use an iv strategy to address the endogeneity of our measure for credit constraints in labor supply equations due to time varying factors our results show that liquidity constraints increase the intensity in the supply of men s labor constrained men work on average 4 hours more than their unconstrained counterpart self employed workers turn out to be more sensitive to binding liquidity constraints possibly because they are more flexible in adjusting the intensity of their labor supply

boom in bust out young households and the housing price cycle abstract the uk experienced a major residential real estate boom bust cycle from the mid 1980s to the mid 1990s accompanied by unprecedented shifts in the owner occupancy rate of young households previous empirical analyses have pointed toward income changes and financial deregulation as the likely causes of this episode with little to say about the differential effects on various age groups we show that in a life cycle model with income heterogeneity and credit constraints the observed co movements of housing prices and owner occupancy rates can be explained as an equilibrium response to income and credit market shocks our findings suggest that the financial liberalisation of the early 1980s was crucial for the unparalleled increase in the owner occupancy rate of young households during the boom

exploring the effects of energy consumption on output per worker a study of albania bulgaria hungary and romania in this article we explore the long run cointegration between output capital and energy consumption in per worker terms for albania bulgaria hungary and romania we use the augmented solow 1956 model and the ardl bounds procedure pesaran et al 2001 to examine the short run and long run effects of energy and capital on output in per worker terms we also conduct causality test using the toda and yamamoto 1995 non causality procedure our results show the existence of long run cointegration between output per worker and energy per worker for all the four countries we find that energy per worker have a dynamic short run positive effect in albania 0 37 bulgaria 0 25 hungary 0 36 and romania 0 68 and a long run positive effect in bulgaria 0 32 and romania 0 63 which duly indicate that energy consumption has a momentous long run effect in these two countries the causality results indicate a unidirectional causation from output per worker to energy per worker for all the four countries and from capital per worker to energy per worker for albania and romania consequently a balance between effective energy consumption and sound energy conservation policies are likely to support economic growth in the four countries

is the energy led growth hypothesis valid new evidence from a sample of 85 countries abstract the energy growth literature contains a large number of discussions on the causal relationship between energy consumption and economic growth the central debate focuses on whether energy consumption contributes or not to economic growth since it has direct implications for the formulation of strategic policies nevertheless current studies cannot provide a conclusive suggestion due to mixed causality results this inconclusive evidence is potentially attributed to model specifications and the stage of economic development of the countries under investigation hence this study attempts to empirically re investigate the validity of the energy led growth hypothesis using a different model specification and different stages of economic development for 85 selected countries around the globe overall although the causality results are mixed among countries we do find a systematic pattern in particular granger causality models with three and four variables are more likely to support the hypothesis compared to their counterparts that contain only two variables in addition both developed and developing countries are more likely to support the energy led growth hypothesis compared to the less developed or low income countries therefore causality results are very sensitive to the choice of the model specification along with the stages of economic development finally energy conservation policies should only focus on low income countries as these policies may not retard the process of economic growth

private transfers borrowing constraints and the timing of homeownership the 1991 italian survey of household income and wealth contains retrospective information on intergenerational transfers this information is used to estimate the impact of transfers on the saving time required to purchase a house it is found that transfers have a small impact on saving time and that after receiving a transfer households purchase considerably larger homes the results have implications for the debate about the source of the relation between aggregate saving and growth

do first time house buyers receive financial transfers from their parents using danish longitudinal data with information about wealth for a sample of first time house buyers and their parents we test whether there are direct financial transfers from parents to children in connection with the house purchase or in connection with unemployment spells occurring just after the purchase when children typically hold few liquid assets first we document that child and parent financial resources are correlated then we introduce conditioning variables and exploit the panel aspect of the data to also condition on fixed unobserved factors which arguably govern preferences and or productivity we find no evidence of direct financial transfers

energy consumption real income and temporal causality results from a multi country study based on cointegration and error correction modelling techniques abstract unlike previous studies on the causal relationship between energy consumption and economic growth this paper illustrates how the finding of cointegration i e long term equilibrium relationship between these variables may be used in testing granger causality based on the most recent johansen s multivariate cointegration tests preceded by various unit root or non stationarity tests we test for cointegration between total energy consumption and real income of six asian economies india pakistan malaysia singapore indonesia and the philippines non rejection of cointegration between variables rules out granger non causality and imples at least one way of granger causality either unidirectional or bidirectionial secondly by using a dynamic vector error correction model we then analyse the direction of granger causation and hence the within sample granger exogeneity or endogeneity of each of the variables thirdly the relative strength of the causality is gauged through the dynamic variance decomposition technique by decomposing the total impact of an unanticipated shock to each of the variables beyond the sample period into proportions attributable to shocks in the other variables including its own in the bivariate system results based on these tools of methodology indicate that while all pair wise relationships shared common univariate integrational properties only relationships for three countries india pakistan and indonesia were cointegrated for these countries temporal causality results were mixed with unidirectional causality from energy to income for india exactly the reverse for indonesia and mutual causality for pakistan the vdcs were not inconsistent with these results and provided us with an additional insight as to the relatively more dominant direction of causation in pakistan simple bivariate vector autoregressive models for the three non cointegrated systems did not indicate any direction of causality significantly in either direction

intergenerational transfers borrowing constraints and saving behavior evidence from the housing market abstract we examine the effects of intergenerational transfers on saving behavior by analyzing transfers targeted to first time home purchases transfer recipients have a shorter time to save for a down payment of 9 20 for each dollar of transfer received total savings falls by 29 40 cents and the down payment rises by 61 71 cents transfer recipients increase the value of the home purchased but by an amount that is much lower than possible if the transfer were fully leveraged in addition transfers appear to help households achieve certain down payment thresholds that give favorable mortgage terms

housing market regulation and the social demand for job protection abstract controlling for country fixed effects there is a positive and statistically significant relationship between the degree of housing market regulation hmr and the strictness of employment protection legislation epl in oecd countries we provide a model in which hmr increases foreclosure costs in case of mortgage default while epl raises the administrative cost of dismissal owing to banks lending behavior individuals demand for job protection increases with the cost of foreclosure we use the model to discuss social housing and family insurance the case for mortgage unemployment insurance the impact of min down payment policies regulations on the use of fixed term contracts the failure of a 2006 french reform of labor contracts and feed back effects from hmr to epl

energy consumption and gdp causality relationship in g 7 countries and emerging markets abstract the causality relationship between energy consumption and income is a well studied topic in energy economics this paper studies the time series properties of energy consumption and gdp and reexamines the causality relationship between the two series in the top 10 emerging markets excluding china due to lack of data and g 7 countries we discover bi directional causality in argentina causality running from gdp to energy consumption in italy and korea and from energy consumption to gdp in turkey france germany and japan hence energy conservation may harm economic growth in the last four countries

owning versus renting do courts matter abstract we develop a legal contract enforcement theory of the decision to own or lease the allocation of ownership rights will minimize enforcement costs when the legal system is inefficient in particular when legal enforcement of contracts is costly there will be a shift from arrangements that rely on such enforcement such as a rental agreement toward other forms that do not such as direct ownership we then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross section of countries we argue that this association is not the result of reverse causation from a developed rental market to more investor protective enforcement and is not driven by alternative institutional channels the results provide supportive evidence for the importance of legal contract enforcement for market development and the optimal allocation of property rights

energy consumption prices and economic growth in three ssa countries a comparative study in this paper we examine the causal relationship between energy consumption and economic growth in three sub saharan african countries namely south africa kenya and congo drc we incorporate prices as an intermittent variable in a bivariate setting between energy consumption and economic growth thereby creating a simple trivariate framework using the ardl bounds testing procedure we find that the causality between energy consumption and economic growth varies significantly across the countries under study the results show that for south africa and kenya there is a unidirectional causal flow from energy consumption to economic growth however for congo drc it is economic growth that drives energy consumption these findings have important policy implications insofar as energy conservation policies are concerned in the case of congo drc for example the implementation of energy conservation policies may not significantly affect economic growth because the country s economy is not entirely energy dependent however for south africa and kenya there is a need for more energy supply augmentations in order to cope with the long run energy demand in the short run however the two countries should explore more efficient and cost effective sources of energy in order to address the energy dependency problem

asymmetries in housing and financial market institutions and emu despite convergence pressures differences in housing and financial market institutions across the 15 member states of the european union are still enormous this paper argues that they have profound effects on the responsiveness of output and inflation in the different countries to changes in short term interest rates as well as to asset market shocks of external origin the economic reasoning behind this claim is set out and the institutional differences are described the paper assesses the sometimes conflicting empirical evidence on this issue barriers to convergence and implications for labour market flexibility are discussed the uk ireland finland and sweden tend to cluster at one extreme of the relevant institutional characteristics the paper concludes with a set of proposals for institutional reforms which would significantly reduce the tensions within emu and the potential for instability in these economies entailed by emu membership

interest rate changes mortgages and consumption evidence from italy summaryusing the italian survey of household income and wealth we study whether the drop in interest rates following the great recession was associated with an increase in consumption for households with adjustable rate mortgages arm relative to those with fixed rate mortgages frm after the reduction in mortgage payments consumption of arm holders increases relative to frm but the implied marginal propensity to consume is not statistically different from zero we suggest three explanations for the weak consumption response to the income shock first cash on hand and debt heterogeneity may attenuate the consumption response second borrowers believe that the income shock was short lasting and that interest rates would likely increase in the future implying a small effect on consumption third the shock is offset partly by a reduction in income from financial assets owned by mortgagors the findings have implications for the conduct of monetary policy interventions and the credibility of the future path of interest rates pass through of monetary policy and design of the mortgage market

majority voting with single crossing preferences we clarify and extend a number of sufficient conditions for the existence of a majority voting equilibrium on one dimensional choice domains these conditions variously stated in the previous literature all impose order restrictions on voter preferences for instance monotone marginal rates of substitution which we show to imply or be equivalent to a general ordinal version of the single crossing condition this simple property is economically intuitive and easily checked in applications this ease of application is demonstrated through an examination of voting models of redistributive income taxation and trade union bargaining behaviour

financial integration and consumption smoothing we test if financial integration improves household consumption smoothing using microeconomic data we find that the process of financial market integration and liberalisation brought about by the introduction of the euro has not affected the sensitivity of consumption with respect to income shocks in italy this article also makes a significant contribution from a methodological point of view because our procedure does not require that consumption and income are available in the same panel data set it can therefore be applied in all countries in which repeated cross sectional consumption data can be combined with panel data on income

energy and economic growth in the usa a multivariate approach abstract this paper examines the causal relationship between gdp and energy use for the period 1947 90 in the usa the relationship between energy use and economic growth has been examined by both biophysical and neoclassical economists in particular several studies have tested for the presence of a causal relationship in the granger sense between energy use and economic growth however these tests do not allow a direct test of the relative explanatory powers of the neoclassical and biophysical models a multivariate adaptation of the test vector autoregression var does allow such a test a var of gdp energy use capital stock and employment is estimated and granger tests for causal relationships between the variables are carried out although there is no evidence that gross energy use granger causes gdp a measure of final energy use adjusted for changing fuel composition does granger cause gdp

the relationship between energy and gnp further results this paper reexamines the casuality between gnp and energy consumption by using updated us data for the period 1947 1979 as a secondary contribution we investigate the causal relationship between energy consumption and employment applying sims technique we find no causal relationship between gnp and energy consumption we find further that there is a slight unidirectional flow running from employment to energy consumption economic interpretations of the empirical results are also presented

first time house buying and catch up a cohort study 2015 the london school of economics and political science we investigate whether different ages of first time house buying lead to persistent differences in homeownership between cohorts our data span nearly 40 years and multiple cycles of england s volatile house prices ownership rates at thirty have differed substantially with a significant negative association with prices the persistence of differences is assessed using synthetic cohort techniques two methods of dealing with measurement error problems both indicate that cohorts with low ownership rates at thirty catch up almost all of the ownership gap by forty earlier access to homeownership may result in the ownership of slightly larger homes at around forty

houses and or jobs ownership and the labour market in belgian districts isebaert d heylen f and smolders c houses and or jobs ownership and the labour market in belgian districts regional studies a j oswald argues that high rates of homeownership may imply inferior labour market outcomes using a panel of forty two belgian districts since the 1970s and accounting for other key determinants of employment this paper confirms the oswald hypothesis a 1 percentage point rise in the rate of ownership in a district implies a statistically significant fall in the employment rate by about 0 35 percentage points this negative effect declines in the fraction of the high skilled in a district the results underscore the importance of controlling for unobserved district specific fixed effects and common time effects and of appropriately dealing with endogeneity

do people respond to tax incentives an analysis of the italian reform of the deductibility of home mortgage interests abstract before 1992 mortgage interests in italy were fully tax deductible up to 3500 euro 7000 for two cosigners in 1992 1994 the government implemented a series of tax reforms whose ultimate effect was to eliminate the relation between the after tax mortgage rate and the marginal tax rate using data from the 1989 2002 survey of household income and wealth we test if the elimination of incentives has affected the sensitivity of the decision to borrow and the amount borrowed with respect to the marginal tax rate regression analysis and difference in differences estimates indicate that tax considerations have not affected the demand for mortgage debt neither at the extensive nor intensive margin these results are consistent with lack of financial information and credit rationing during the sample period

parental wealth and first time homeownership a cohort study of family background and young adults housing situation in sweden this paper investigates whether family background seems to have any influence on first time homeownership recent studies have indicated that it has become more difficult to become established in the housing market and such situations may increase the importance of parental wealth in this study parental wealth is estimated as family background information on parents homeownership father s socioeconomic status and single parenting unique cohort data for three birth cohorts suggest that there is a significant cohort effect in young adults tenure decision furthermore the results imply that parents homeownership has become a more important predictor of the transition to first time homeownership for those young adults facing increasing problems in the housing market

a multivariate cointegration analysis of the role of energy in the us macroeconomy abstract this paper extends my previous analysis of the causal relationship of gdp and energy use in the usa in the post war period a majority of the relevant variables are integrated justifying a cointegration analysis the results show that cointegration does occur and that energy input cannot be excluded from the cointegration space the results are plausible in terms of macroeconomic dynamics the results are similar to my previous granger causality results and contradict claims in the literature based on bivariate models that there is no cointegration between energy and output

energy and economic growth grounding our understanding in physical reality this article attempts to summarise the complex wide ranging and unresolved debate within the economics literature on the possibility of decoupling economic growth from energy use it explores the difference between neo classical and ecological economic worldviews and highlights how the ecological economic approach attempts to ground its analysis within the physical limits implied by the laws of thermodynamics once these laws are accounted for the possibility of decoupling economic growth from energy use seems more limited than neo classical economics implies analysis of empirical evidence also demonstrates that observed improvements in gdp energy use ratios in the usa are better explained by shifts towards higher quality fuels than by improvements in the energy efficiency of technologies this implies a need to focus on decarbonising energy supply furthermore where energy efficiency improvements are attempted they must be considered within the context of a possible rebound effect which implies that net economy wide energy savings from energy efficiency improvements may not be as large as the energy saved directly from the efficiency improvement itself both decarbonising energy supply and improving energy efficiency require the rapid development and deployment of new and existing low carbon technologies this review therefore concludes by briefly outlining areas of economic thought that have emerged as a result of engagement between economists and experts from other disciplines they include ecological evolutionary and institutional economics all of which can make policy relevant contributions to achieving a transition to a low carbon economy

energy consumption economic growth and prices a reassessment using panel vecm for developed and developing countries this paper reinvestigates the energy consumption gdp growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002 among the energy exporters there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run while in the developing countries energy consumption stimulates growth only in the short run the former result is also found for energy importers and the latter result exists only for the developed countries within this category in addition compared to the developing countries the developed countries elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary lastly the implications for energy policy calling for a more holistic approach are discussed c 2006 elsevier ltd all rights reserved

a panel study of nuclear energy consumption and economic growth abstract this study examines the relationship between nuclear energy consumption and economic growth for sixteen countries within a multivariate panel framework over the period 1980 2005 pedroni s 1999 2004 heterogeneous panel cointegration test reveals there is a long run equilibrium relationship between real gdp nuclear energy consumption real gross fixed capital formation and the labor force with the respective coefficients positive and statistically significant the results of the panel vector error correction model finds bidirectional causality between nuclear energy consumption and economic growth in the short run while unidirectional causality from nuclear energy consumption to economic growth in the long run thus the results provide support for the feedback hypothesis associated with the relationship between nuclear energy consumption and economic growth

do europeans view their homes as castles homeownership and poverty perception throughout europe the paper investigates the notion that homeownership affects poverty perception this is investigated by utilising a logit model to analyse various characteristics of homeowners in 11 different european nations overall the analysis fails to reject the notion that homeowners throughout europe are less likely to perceive themselves as living in poverty but no evidence is found that homeownership is more valued in nations with high owner occupancy rates however support is found for the notion that homeownership is used as a form of security in countries that experience greater income inequality

financial market imperfections and home ownership a comparative study abstract we explore the determinants of the distribution of owner occupancy rates across age groups using a collection of microeconomic data on 14 oecd countries in most the survey is repeated over time this allows us to construct an international dataset merging data on 39 national household surveys with aggregate data on down payment ratios we find strong evidence that the availability of mortgage finance as measured by down payment ratios affects the distribution of owner occupancy rates across age groups especially at the young end the results are consistent with previous theoretical models and have important implications for the debate on the relation between saving and growth

the design of rent seeking competitions committees preliminary and final contests the paper examines the common practice in multi contest rent seeking competitions where finalists are selected based on rent seekers efforts in a preliminary contest we find that for any single contest design rent seeking expenditures could be reduced by introducing a preliminary contest if the marginal returns to rent seeking effort in the preliminary contest is sufficiently low in addition to other reasons the paper argues that this may explain why such multi contest designs are common we argue that rent seeking expenditure in the preliminary stage represents the cost of reducing the number of contestants we also find that the practice of setting a higher quality standard in the final contest than the quality standard in the preliminary contest reduces rent seeking waste we derive an expression for the optimal number of finalists under certain conditions we find that the optimal number of finalists is directly proportional or equal to the square root of the number of potential contestants finally we show that whether rent seeking expenditures rise or fall when the rent is awarded by a committee instead of a single administrator depends on the sensitivity of the committee relative to that of the single administrator

endogenous determination of public budget allocation across education stages abstract this paper studies the endogenous determination of public budget allocation across hierarchical education stages in less developed economies the top class has dominant political power to implement its most preferred policy which is characterized by exclusive participation and large schooling expenditure at higher education at the expense of basic education in developed economies the budget allocation is more balanced under certain parameters it leads to expanded participation of the middle class in higher education the model offers an explanation to the observed cross country policy difference and is broadly consistent with historical evidence

borrowing constraints home ownership and housing choice evidence from intra family wealth transfers we study the impact of borrowing constraints on home ownership and housing demand by comparing the tenure choice and housing quality of consumers who receive intra family wealth transfers to those that do not our analysis is based on household level panel data providing information on the receipt of wealth transfers changes in tenure status as well as changes in the size and quality of housing on average we find that the receipt of a wealth transfer increases the propensity of consumers to transition from renters to home owners by 6 8 percentage points 35 of the sample mean additional analyses suggest that this effect is unlikely to be driven by wealth effects and can thus be attributed to the relaxation of borrowing constraints by contrast wealth transfers do not increase the likelihood that existing homeowners trade up to larger homes in better locations

renewable energy consumption and economic growth evidence from a panel of oecd countries abstract this study examines the relationship between renewable energy consumption and economic growth for a panel of twenty oecd countries over the period 1985 2005 within a multivariate framework given the relatively short span of the time series data a panel cointegration and error correction model is employed to infer the causal relationship the heterogeneous panel cointegration test reveals a long run equilibrium relationship between real gdp renewable energy consumption real gross fixed capital formation and the labor force with the respective coefficients positive and statistically significant the granger causality results indicate bidirectional causality between renewable energy consumption and economic growth in both the short and long run

voting on meritocracy abstract this paper considers a setting where a resource such as education budget is to be distributed among agents the latter differ in their ability to make use of the resource and the issue is that of determining the allocation rule whereby the individual shares of the resource may depend on their relative efforts of obtaining it the paper s focus is on endogenous determination through voting of the degree of meritocracy in the resource allocation system which determines the marginal productivity of one s effort it is found that a meritocratic system is expected to be supported by highly productive individuals and opposed by those with low productivity when the decision making becomes less elitist and involves broader participation of population groups the support for meritocracy decreases

income distribution borrowing constraints and redistributive policies this paper sheds light on the relationship between income inequality and redistributive policies and provides possible guidance in the specification of empirical tests of such a relationship we model a two period economy where capital markets are imperfect and agents vote over the level of taxation to finance redistributive policies that enhance future productivity in this context we show that the pivotal voter is not necessarily the agent class with median income in particular the poor who are more likely to be liquidity constrained may form a coalition with the rich and vote for low redistribution the effects of an increase in income inequality on the level of redistribution turn out to depend on whether the increase in inequality is concentrated among the poor or the middle class empirical results from a panel of 22 oecd countries provide preliminary evidence consistent with our main theoretical implications

structural break unit root and the causality between energy consumption and gdp in turkey abstract this paper tries to investigate a series of unit root and causality tests to detect causality between the gdp and energy consumption in turkey employing hsiao s version of granger causality method for the 1950 2000 period the conventional unit root tests indicate the series are i 1 whereas the endogenous break unit root tests proposed by zivot and andrews zivot e and andrews d w k 1992 further evidence on the great crash the oil price shock and the unit root hypothesis journal of business and economics statistics 10 251 270 and perron perron p 1997 further evidence on breaking trend functions in macroeconomic variables journal of econometrics 80 355 385 reveal that the series are trend stationary with a structural break therefore it is inappropriate to take the first difference of the data to achieve stationarity the main conclusion of this study is that there is no evidence of causality between energy consumption and gdp in turkey based on the detrended data

does high cost of mortgage debt explain why young adults live with their parents young adults leave their parents homes at a higher rate in northern europe or in the united states than in southern europe with broad implications on labor market mobility and on fertility we assess if differences in household formation are associated to differences in access to credit by estimating the impact of the cost of a mortgage on the probability that a young adult leaves his or her parents home exogenous changes in the cost of credit are identified using the reform in 1998 and the cancellation in 2002 of credito bonificado a portuguese program that provided four different reductions of the interest rate of mortgages signed by low and medium income youth using a unique data set that links administrative records of debt with the 1998 2004 waves of the employment survey we document three findings first borrowing among young adults fell when borrowing costs increased second the elasticity of new household formation with respect to net interest rates lies between 0 8 and 3 3 third young adults responded to the increase in mortgage costs by delaying home purchases or by reducing the quality of housing services purchased but there was only a modest increase of the probability of renting a new accommodation jel d91 h24 j13

the distribution of wealth and the mpc implications of new european data using new micro data on household wealth from fifteen european countries the household finance and consumption survey we first document substantial cross country variation in how various measures of wealth are distributed across individual households through the lens of a standard realistically calibrated model of buer stock saving with transitory and permanent income shocks we then study how cross country dierences in the wealth distribution and household income dynamics aect the marginal propensity to consume out of transitory shocks mpc we find that the aggregate consumption response ranges between 0 1 and 0 4 and is stronger i in economies with large wealth inequality where a larger proportion of households has little wealth ii under larger transitory income shocks and iii when we consider households only using liquid assets rather than net wealth to smooth consumption

energy use and output growth in canada a multivariate cointegration analysis 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