Transition to Renewable Energy Production in the United States: The Role of Monetary, Fiscal, and Trade Policy Uncertainty

Abstract

Renewable energy has emerged as a key to attain higher economic growth without any detrimental impact on the environment. Therefore, the entire world is in the transition phase from non-renewables to renewables. To improve the levels of production of renewable energy, it is inevitable to discern its determinants. Hence, this study aims to probe the impact of monetary, fiscal, and trade policy uncertainty on renewable energy production in the United States. To this end, the novel smooth and sharp structural breaks unit root test is used to scrutinize the order of integration. Next, we also apply the novel augmented autoregressive distributed lag methodology for discerning cointegration. The findings note that, in the long- and short-run, monetary policy uncertainty plunges the production of renewable energy, whereas fiscal policy uncertainty upsurges it. Further, trade policy uncertainty does not affect renewable energy production. Based on these results, we propose policy suggestions that could expedite the transition to renewables.