Towards sustainable development: Exploring the spillover effects of green technology innovation on energy markets and economic cycles

Abstract

With the proposal of sustainable development goals, the world has placed increasing emphasis on energy transition and green, low-carbon initiatives, leading to the emergence of green technology. This article explores the spillover effects among green technology innovation (GTI), oil prices (OP), clean energy (CE), sustainable development (SD), and economic cycles (EC) with the time-varying parameter vector autoregression (TVP-VAR) connectedness method. The empirical results demonstrate that, in static analysis, the short-term connectedness is significantly stronger than that in the long term. SD serves as the main transmitter, while EC acts as the primary receiver. Furthermore, dynamic analysis suggests that spillover effects fluctuate with time and frequency. Finally, the net direction and net pairwise connectedness reveal that GTI is favorable for mitigating OP shocks and accelerating EC in the long term, while it is driven by CE and SD in the short term. The contribution of this paper lies in its incorporation of GTI, energy markets, economic cycles, and SD into a unified framework, and its detailed analysis of the channels of influence. Also, based on a time-frequency domain perspective, the paper dynamically examines the different performances of specific markets in the short or long term. Finally, the paper proposes some policy recommendations, including the strengthening of green technology innovation and the acceleration of energy transition.