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Time-varying Relationship between Fossil Fuel-Free Energy Indices and Economic Uncertainty: Global Evidence from Wavelet Coherence Approach

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  • Farah Durani

    (University of Business and Technology, Jeddah, Saudi Arabia.)

Abstract

Considering the abysmal environmental impacts of anthropogenic activities, the entire world has been striving to shift toward a green economy. Also, the transition to a greener economy entails green financing, which escalates the pace and performance of environment-friendly economic activities. However, uncertain economic conditions might be a hindrance to green financing. Based on this, I investigate the co-movement of fossil-fuel-free energy equity indices returns and Twitter-based economic uncertainty using a wavelet coherence approach. The findings document that global, the US, and Japanese fossil-fuel-free indices show strong and positive co-movement with Twitter economic uncertainty for short- and medium-term investment horizons. However, a weak positive co-movement is observed during the Russia-Ukraine war. Based on these interesting findings, I suggest many policy implications.

Suggested Citation

  • Farah Durani, 2024. "Time-varying Relationship between Fossil Fuel-Free Energy Indices and Economic Uncertainty: Global Evidence from Wavelet Coherence Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 663-672, January.
    • Handle: RePEc:eco:journ2:2024-01-71
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    More about this item

    Keywords

    Renewable energy investment; Energy markets; Twitter-based economic uncertainty; Fossil fuel-free energy equity; Russia-Ukraine war; COVID-19;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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