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Oil price, green innovation and institutional pressure: A China's perspective

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  • Hu, Jinyan
  • Wang, Kai-Hua
  • Su, Chi Wei
  • Umar, Muhammad

Abstract

Oil is of dominated role in global energy market, and its price volatility would bring significant economic and environmental consequents. Given China is the largest oil importer, this paper applies the mixed frequency vector autoregression (MF-VAR) to investigate the causal relationship among oil price (OP), green innovation (GI), and institutional pressure (IP). The empirical results from MF-VAR model show that quarterly OP would stimulate GI with time-varying, which is not found in low frequency vector autoregression (LF-VAR). The new evidence mainly due to the mix frequency technique, which allows heterogeneous impacts exist between high and low frequency variables. In addition, higher IP is also discovered to promote GI. The major contribution is that a theoretical framework is initially constructed, and oil price is proven to as important booster for China's green innovation. Therefore, some policies such as innovation subsidy and green credit need to be employed to reduce the impacts from oil price fluctuations and main sustainable GI capability. Meanwhile, IP mainly from environmental protection requires government to launch stricter environmental regulations and laws, and establish reward and punishment mechanism to promote GI.

Suggested Citation

  • Hu, Jinyan & Wang, Kai-Hua & Su, Chi Wei & Umar, Muhammad, 2022. "Oil price, green innovation and institutional pressure: A China's perspective," Resources Policy, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:jrpoli:v:78:y:2022:i:c:s0301420722002367
    DOI: 10.1016/j.resourpol.2022.102788
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