The relationship between oil price changes and economic growth in Canadian provinces: Evidence from a quantile-on-quantile approach

Abstract

This paper analyzes the relationship between oil price changes and economic growth in Canadian provinces using the quantile-on-quantile (QQ) approach. The applied methodology can capture the linkage between the two variables under different economic states while considering the size and sign of the oil price changes. The results show that the impacts of oil price changes on Canadian provinces’ economic growth are considerably heterogeneous across different quantiles of the two variables. The results also reveal that the oil-economic growth relationship is heterogeneous across Canadian provinces, both within each group of oil-producing and non-oil-producing provinces and between the two groups.