Combined asymmetric influences of renewable energy consumption and categorical economic policy uncertainty on economic growth in Japan: New insights from QQR and KRLS approaches

Publication Name: Environment Development and Sustainability

Publication Date: 2025-01-01

Volume: Unknown

Issue: Unknown

Page Range: Unknown

Description:

This study focuses on the asymmetric relationship between categorical economic policy uncertainty indices and Japanese economic growth and renewable energy consumption from January 1987 to December 2021. Economic policy uncertainty has multidimensional effects on the global economy. To address non-linearity, Kernel-Based Regularized Least Squares (KRLS) and quantile-on-quantile regression (QQR) are applied to examine the impact of fiscal policy uncertainty, monetary policy uncertainty, trade policy uncertainty, and exchange rate uncertainty on economic growth and renewable energy consumption. The average KRLS results indicate that fiscal and exchange rate policy uncertainty negatively influence economic growth, while uncertainty in monetary and trade policy has a favorable impact in the long-term. A significant decrease in renewable energy consumption is attributed to increasing fiscal and trade policy uncertainty indices, whereas monetary and exchange rate policy uncertainty contributes to the enhancement of renewable energy consumption. The QQR results align with the KRLS findings, with a slight variation for monetary policy uncertainty, which was found to be negligible for economic growth across all quartiles according to QQR approach. Given the recent increase in economic policy uncertainty due to the COVID-19 pandemic and the Ukrainian conflict, our findings support several crucial policy recommendations for promoting economic development and renewable energy consumption in Japan.

Open Access: Yes

DOI: 10.1007/s10668-025-06156-w

Authors - 5