INVESTIGATION OF COINTEGRATION AND CAUSALITY BETWEEN ENERGY-CONSUMPTION AND EMPLOYMENT WITH IMPLICATIONS FOR THE ENVIRONMENT

Applying Hsiao's version of the Granger causality method, this article examines the multivariate causality between energy consumption and em ployment with the environmental implications for the United States. Un it root and cointegration tests are performed. While no causality from energy consumption to employment is found, a reverse causality from e mployment to energy consumption is detected. This study implies that a reduction in energy consumption may reduce air pollution and preserve clean air, yet it may not cause major changes in the level of employm ent for those economies that are service oriented.