The Relationship between Energy Consumption and Economic Growth in the USA: A Non-Linear ARDL Bounds Test Approach

We study the relationship between energy consumption and economic growth in the case of USA by using an asymmetric ARDL bounds test approach to achieve the actual model. The quarterly data set covers the period of 1973:1- 2013:4. The findings indicate that the effect of energy consumption is asymmetric in the long term but not in the short term. In the long run, the effect of negative component of energy consumption on economic growth is small and statistically insignificant. The coefficient of the positive component of energy consumption is found about 0.9 and statistically significant at 1% level. We conclude that energy saving policies such as technological progress and organizational rearrangements may have the dimmer effect for the impact of a negative component of energy consumption and the booster effect for impact of the positive component of energy consumption. Thus, energy saving policy should be tightly followed by the goal of high economic growth.