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How Do Global Uncertainties Spillovers Affect Leading Renewable Energy Indices? Evidence from the Network Connectedness Approach

Author

Listed:
  • Mohd Ziaur Rehman

    (Department of Finance, College of Business Administration, King Saud University, P.O. Box 71115, Riyadh 11587, Saudi Arabia)

  • Shabeer Khan

    (College of Business Administration, Al Yamamah University, Riyadh 11587, Saudi Arabia)

  • Uzair Abdullah Khan

    (Department of Business Administration, Sukkur IBA University, Sukkur 65200, Pakistan)

  • Wadi B. Alonazi

    (Health Administration Department, College of Business Administration, King Saud University, P.O. Box 71115, Riyadh 11587, Saudi Arabia)

  • Abul Ala Noman

    (Faculty of Management and Economics, Ruhr University Bochum (RUB), 44801 Bochum, Germany)

Abstract

By using data from 2018 to 2022 and employing quantile VAR time-frequency and quantile VAR spillover models, this study investigates the spillover connectedness between global uncertainties, namely, geopolitical risk, economic policy uncertainty, and climate policy uncertainty, and seven leading global renewable energy indices. The results show strong total connectedness (82.87%) between renewable energy and uncertainty indices. DJRE, R&CE, MSCIEE, WRE_cpu, GEPU_C, and GEPU_P are found to be net receivers, and WRE to be net transmitters of spillovers. Additionally, the MSCIEE sector is the least connected, i.e., 2.51%, followed by the R&CE sector at 4.55%, while the ERE sector is the most connected one, i.e., 65.8%. We discover that the two market-based uncertainties have less impact than economic policy uncertainty (EPU), which has a significant impact. The conclusions have ramifications for decision-makers and investors in the renewable energy markets from the standpoint of sustainable development. The study reveals diversification avenues and recommends that investors consider MSCIEE and R&CE sectors for parking their funds because of lower risk, i.e., less connectivity and greater diversification.

Suggested Citation

  • Mohd Ziaur Rehman & Shabeer Khan & Uzair Abdullah Khan & Wadi B. Alonazi & Abul Ala Noman, 2023. "How Do Global Uncertainties Spillovers Affect Leading Renewable Energy Indices? Evidence from the Network Connectedness Approach," Sustainability, MDPI, vol. 15(18), pages 1-15, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13630-:d:1238209
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