The Response of Green Energy and Technology Investment to Climate Policy Uncertainty: An Application of Twin Transition Strategy

Shaiara Husain, Kazi Sohag () and Yanrui Wu
Additional contact information
Yanrui Wu: Business School, The University of Western Australia, http://www.web.uwa.edu.au/person/yanrui.wu

No 22-16, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Twin transition strategy enforces the indisputable complementary relationship between green and digital transitions. This socio-technical process necessitates a paradigmatic shift to translate policy related uncertainties into twin transition strategies. With this background, the present study investigates the responsiveness of green markets to climate policy uncertainty (CPU) in the US economy by applying the cross-quantilogram approach and recently devised indices of CPU, green equity and green bond from 30th July 2014 to 31ste March 2021. The empirical findings demonstrate that the asymmetric relationship between green financial investment and CPU is positively related in the longer memory during period of high uncertainty. At the bearish state of the market, the responsiveness of green equity returns to CPU is profound compared to green equities in the medium memory. In general, CPU provides more opportunities in the green equity market than in the green bond market. The asymmetric behaviour is more prominent in the long run, implying that both green bond and green equity indices demonstrate higher portfolio performance in the long term than in the short term. This study shows that CPU provides a better explanation for green market responsiveness than other uncertainty indices.

Keywords: Climate Policy Uncertainty; Social Innovation; Green Bond; Green Equity; Spillover; Cross-Quantilogram (search for similar items in EconPapers)
JEL-codes: G0 G1 O35 Q4 (search for similar items in EconPapers)
Pages: 34
Date: 2022
New Economics Papers: this item is included in nep-ene and nep-env
Note: MD5 = be7989ad25f8fbb1756a392132f3b612
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%2 ... ohag%20and%20Wu1.pdf (application/pdf)

Related works:
Journal Article: The response of green energy and technology investment to climate policy uncertainty: An application of twin transitions strategy (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:22-16

Access Statistics for this paper

More papers in Economics Discussion / Working Papers from The University of Western Australia, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sam Tang ().