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Testing the persistence of shocks on renewable energy consumption: Evidence from a quantile unit-root test with smooth breaks

Chien-Chiang Lee (), Omid Ranjbar () and Chi-Chuan Lee

Energy, 2021, vol. 215, issue PB

Abstract: The investigation of the stationarity of renewable energy consumption has become a new branch of research in energy economics due to its importance in macroeconomics and environmental sustainability. Whether shocks to renewable energy consumption (which may be related to the implementation of energy policies) have permanent/transitory effects has yet to be explored. This study applies an extension of the quantile unit-root test with smooth breaks to examine the stochastic properties of renewable energy consumption in the US economy and the 50 states plus the District of Columbia during 1960–2017. Unlike traditional unit-root tests, which fail to reject the unit-root hypothesis, our results reveal that the unit-root hypothesis is rejected for the renewable energy consumption series of the United States and for 32 of the 51 states/district. In these cases, any policy for encouraging renewable energy will not be effective as the consumption will quickly return to its trend path. The evidence also reveals the presence of asymmetric responses to shocks for different states. Policymakers should consider these effects when they develop energy policy. For some states, where large positive/negative shocks have long-lasting effects on renewable energy consumption, the government should implement strong policies to further develop renewable energy and thus achieve economic and environmental sustainability.

Keywords: Renewable energy consumption; Unit-root test; Quantile regression; Smooth breaks; Fourier expansion (search for similar items in EconPapers)
JEL-codes: C22 Q43 Q47 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:215:y:2021:i:pb:s0360544220322970

DOI: 10.1016/j.energy.2020.119190

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