Oil consumption and growth: Is there a threshold effect of greenhouse gases emissions

Sarah Nandnaba, Abebe Hailemariam, Rangan Gupta and Xin Sheng

Innovation and Green Development, 2025, vol. 4, issue 3

Abstract: The paper empirically examines the threshold effect of GHG(s) emissions on the oil consumption-growth nexus. Using a nonlinear local projection approach and an extended historical dataset from 1890 to 2022, we find that the impact of oil consumption on economic growth is conditional on the level of GHG(s) emissions. More specifically, we find that economies in high-emission regimes face a slowdown in growth while those in low-emission regimes benefit from a positive shock in oil. The results have important policy implications for sustainable growth.

Keywords: Oil consumption; Economic growth; Sustainability; Climate change; Greenhouse GHG(s) emissions; Nonlinear local projection (search for similar items in EconPapers)
JEL-codes: Q43 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ingrde:v:4:y:2025:i:3:s2949753125000372

DOI: 10.1016/j.igd.2025.100240

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