Coal consumption and industrial production nexus in USA: Cointegration with two unknown structural breaks and causality approaches |
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Authors: | Ertugrul Yildirim Alper Aslan Ilhan Ozturk |
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Affiliation: | 1. Bulent Ecevit University, Department of Economics, 67100 Zonguldak, Turkey;2. Nevsehir University, Faculty of Economics and Administrative Sciences, 50300 Nevsehir, Turkey;3. Cag University, Faculty of Economics and Business, Adana-Mersin Karayolu uzeri, Yenice, 33800 Mersin, Turkey |
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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. |
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