Nexus between economic policy uncertainty, foreign direct investment, government debt and renewable energy consumption in 13 top oil importing nations: Evidence from the symmetric and asymmetric investigation

Abstract

The motivation of the study is to gauge the role of economic policy uncertainty (EPU), foreign direct investment (FDI) and government debt (DEBT) on renewable energy integration in the economy by taking a panel of top 13 oil-importing nations for the period 1995–2018. The study applied several econometrical tools for evaluating the nexus, such as cross-sectional dependency, slop of homogeneity, CADF and CIPS for unit root test, Panel ARDL for symmetric effects and NARDL for asymmetry, and causality test for directional association. Long-run association between EPU, FDI, DEBT and REC was revealed with conventional and error correction-based contention tests. Regarding panel ARDL estimation, study findings established a negative statistically significant association between economic policy uncertainty and renewable energy consumption, whereas positive statistically significant effects were documented on REC from FDI and government debt. Furthermore, the study implemented asymmetric ARDL to evaluate the nonlinear effects of EPU, FDI and DEBT on renewable energy consumption. For asymmetric effects of EPU on REC, the study revealed a negative statistically significant linkage between positive and negative shocks in EPU and renewable energy consumption. Regarding the asymmetric shocks in FDI and DEBT, the study unveiled a positive, statistically significant connection with renewable energy consumption.