Dynamic interrelations between environmental innovations, human capital, and energy security in Vietnam: new evidence from an extended TVP-VAR approach.

Abstract

This study employs an extended joint connectedness approach, as well as a time-varying parameter vector autoregression technique (ETVP-VAR), to characterize the interrelationships among six factors, namely, renewable energy, environmental innovations (EI), gross domestic product (GDP), human capital, energy consumption, and energy productivity (EP), from 1995 to 2019 in Vietnam. Taking a holistic view, it appears that both energy consumption and GDP are net recipients of contagion shocks. In addition, renewable energy, as well as environmental innovations, is critical net transmitters during our studied period. From 1995 to 2003, human capital constantly acted as a crucial net shock absorber before switching to a crucial net transmitter after that year. With a significant exception around 1997, this variable is mostly a shock transmitter when it comes to energy production. Pairwise connectedness reveals that renewable energy consistently appears as a shock transmitter to GDP, human capital, energy consumption, and energy productivity. That being said, environmental innovations consistently contribute to renewable and green energy volatility by transmitting shocks from other markets.