Green shoots in uncertain times: Decoding the asymmetric nexus between monetary policy uncertainty and renewable energy

Abstract

The global economic landscapes are overshadowed by monetary policy uncertainty (MPU), challenging various sectors. However, its impact on renewable energy consumption (REC) remains ambiguous, reflecting the sector's complex interplay with economic forces. This study seeks to unravel the complexities by examining how fluctuations in monetary policy affect REC in key emerging economies, including China, India, Russia, Brazil, South Africa, Indonesia, Mexico, Turkey, Nigeria, and Vietnam. Previous studies predominantly relied on panel data techniques, overlooking the distinct traits of individual nations. In contrast, this investigation employs the refined Quantile-on-Quantile approach to meticulously analyze the relationship between variables in each economy separately, thus enhancing precision. By integrating this advanced method, the study uncovers previously unnoticed dynamics across emerging economies, offering a more nuanced and accurate assessment than traditional methods. This approach provides a holistic global perspective and tailors insights to specific economies, addressing the complexity of MPU's impact on REC. The findings reveal that MPU negatively affects REC across various quantiles in most selected nations, an insight with significant practical implications. These results offer invaluable guidance for policymakers in developing strategies to mitigate the adverse effects of monetary uncertainty, enabling the design of targeted, nation-specific policies for promoting sustainable energy use.