Structural break, unit root, and the causality between energy consumption and GDP in Turkey Galip Altinay a, * , Erdal Karagol b a Department of Economics and Finance, Dogus University, Acibadem, Kadikoy/Istanbul 34722, Turkey b Balikesir University, Department of Economics, Bandirma, Balikesir 10200, Turkey Available online 1 September 2004 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. D 2004 Elsevier B.V. All rights reserved. JEL classification: Q43; C52 Keywords: Energy consumption; Causality; Turkey 1. Introduction Because of the energy crisis in the 1970s and the price hikes, especially in oil prices, economic growth of developing countries has been negatively affected. The association 0140-9883/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.eneco.2004.07.001 * Corresponding author. Tel.: +90 542 593 2559; fax: +90 216 327 9631. E-mail addresses: galtinay@yahoo.com (G. Altinay)8 karagol@balikesir.edu.tr (E. Karagol). Energy Economics 26 (2004) 985 – 994 www.elsevier.com/locate/eneco