The authors revisit the relationship between US economic growth and crude oil prices considering Industrial Production Index and West Texas Intermediate crude oil spot prices as respective proxies for a period spanning over January 1986 to June 2017. To capture the asymmetric and time-varying relationship, the authors employ maximum overlap discrete wavelet transform (MODWT)-based quantile regression (QR) analysis. Interestingly, MODWT-based QR analysis provides evidence of supply-driven link between crude oil prices and economic growth in the short run. However, in the medium to long run a demand-driven link is dominant. In addition, the QR results without MODWT also advocate a demand-driven link. Overall, the result of this study adds a new dimension to the literature on the relationship between crude oil prices and economic growth by focusing upon the time-frequency varying business cycle fluctuations.
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Das et al. (2017) studied this question.
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