Crude oil conservation policy hypothesis in OECD (organisation for economic cooperation and development) countries: A multivariate panel Granger causality test

This study examines the Granger causality among crude oil consumption, crude oil price, dollar exchange rate and economic growth in twenty seven OECD (organisation for economic cooperation and development) countries over the period 1976-2009 within a panel multivariate framework. Panel cointegration tests showed the existence of long-run relationships among crude oil consumption, crude oil price and GDP (gross domestic product); and panel Granger causality test results provided empirical evidence of causality relationships running from crude oil price to crude oil consumption and also to GDP; and a bidirectional causality relationship among crude oil consumption and GDP, both in the short and long runs (feedback hypothesis). These results mean that crude oil conservation policies affect OECD economic growth in the short and long runs, and therefore, policymakers should consider that increasing crude oil price or reducing crude oil consumption adversely impacts on the economic growth rate of the OECD countries. (C) 2012 Elsevier Ltd. All rights reserved.