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Asymmetric connectedness between oil price, coal and renewable energy consumption in China: Evidence from Fourier NARDL approach

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  • Zaghdoudi, Taha
  • Tissaoui, Kais
  • Maaloul, Mohamed Hédi
  • Bahou, Younès
  • Kammoun, Niazi

Abstract

This paper examines the asymmetric effects of oil price shocks on coal and renewable energy consumption in China over long and short periods. The novelty of this study is to investigate whether the consumption of coal and renewable energy are asymmetrically affected by the oil price in a time–frequency framework by performing a Fourier nonlinear ARDL model which is robust to overcome the multiple smooth structural changes in data. The bounds test of the FNARDL specification provide strong evidence of cointegration among variables, including coal energy consumption, renewable energy consumption, oil price, and economic growth. Results reveal the following: First, the oil price-coal energy consumption and oil price-renewable energy consumption relationships are nonlinear. Second, oil price increases have significant short-run effects on coal energy consumption. However, oil price increases induce an increase in renewable energy consumption in China in both the short and the long term. Finally, the relationship between coal energy consumption and economic growth is U-shaped. Hence, increasing oil prices boost China’s prospects for coal in the short term and its usage of renewable energy in the long run.

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  • Zaghdoudi, Taha & Tissaoui, Kais & Maaloul, Mohamed Hédi & Bahou, Younès & Kammoun, Niazi, 2023. "Asymmetric connectedness between oil price, coal and renewable energy consumption in China: Evidence from Fourier NARDL approach," Energy, Elsevier, vol. 285(C).
    • Handle: RePEc:eee:energy:v:285:y:2023:i:c:s0360544223028104
    DOI: 10.1016/j.energy.2023.129416
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