The impact of shale gas development on the U.S economy: Evidence from a quantile autoregressive distributed lag model

The advent of shale gas in economically and commercially viable scale has changed the dynamics of the U.S energy profile making it a net exporter of natural gas. However, despite the growing importance of shale gas, its impact on the economy of US has not been substantially investigated. This creates gaps in the empirical literature of energy economics with limited policy guides for the policy makers and other relevant stakeholders. This paper therefore contributes to the extant literature by examining the impacts of shale gas on economic expansion in the U.S in an augmented framework that includes capital stock and labour as additional variables. With quarterly dataset that covers the period, 2002Q1 to 2019Q1, we employed Cho et al. (2015) [1]’s Quantile Autoregressive Distributed Lag (QARDL) modelling technique to probe the long run relationships between the variables. The results confirm a long-run significant impact of shale gas and capital stock on economic growth of U.S while labour force is found to be a positive but not significant factor in economic growth of the U.S. Investment in capital infrastructure that can enhance the technology of natural gas extraction and fracking is recommended for full optimization of the shale gas consumption. Concerted efforts should also be made, through research and development, to improve the efficiency of labour force.