ENERGY AND ECONOMIC-ACTIVITY IN THE UNITED-STATES - EVIDENCE FROM 1900 TO 1945

Applying Hsiao's version of the Granger causality method, this article makes the first attempt to examine causality between (1) energy and g rowth and (2) energy and employment, by applying the recently develope d methods of cointegration and Hsiao's version of the Granger causalit y to transformed U.S. data for the period 1900-1945. Phillips-Perron t ests reveal that the original series of energy data are not stationary , and therefore a first differencing is performed to induce stationari ty. The study finds interestingly that there is causality unidiretiona lly running from energy to growth without feedback. It is also found t hat there are no causal link between energy and employment The results of this study ave consistent with some past studies using postwar-per iod data but contrary to some other past studies that covered the peri od after World War II.