New Evidence on the Relationship Between Crude Oil Consumption and Economic Growth in the US: A Quantile Causality and Cointegration Approach

This paper investigates the long-run and short-run relationship between WTI crude oil consumption and economic growth, covering the US economy for the period from 1955Q 1 to 2016Q 4 . The Quantile ARDL approach developed by Cho et al. ( 2015 ) is applied to examine the long-run cointegrating relationship between the variables. Additionally, a quantile Granger causality test developed by Troster ( 2017 ) is also applied to examine the causal association between crude oil consumption and economic growth. The empirical evidence underscores the presence of nonlinearities and locational asymmetries. The growth hypothesis holds for the smallest quantiles, suggesting a unidirectional causality relationship running from oil consumption to economic growth. A feedback effect between oil consumption and economic growth is found for the medium quantiles. This empirical evidence has concrete implications for economists and energy policy makers.