The linkage between crude oil consumption and economic growth in Latin America: The panel framework investigations for multiple regions

In this study we examine the cointegration and the Granger causality relationships among crude oil consumption and economic growth in Latin America during 1980-2012. We apply a multivariate panel framework model with including crude oil price as a control variable. The Latin American region is divided into three groups: a panel of six Caribbean countries, a panel of six Central American countries, and a panel of eight South American countries. The long-run causality results indicate that in the Caribbean and South America, economic growth and crude oil consumption do not Granger cause each other, therefore policy makers can pursue crude oil conservation policies without a significant negative effect on economic growth, however in Central America there is a unidirectional causality relationship from crude oil consumption to economic growth, which shows that in this region crude oil conservation policies should be implemented more carefully.