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Sector-by-sector non-renewable energy consumption shocks and manufacturing performance in the U.S.: Analysis of the asymmetric issue with nonlinear ARDL and the role of structural breaks

Oluwasegun Adekoya (), Timilehin P. Ogunnusi and Johnson Oliyide

Energy, 2021, vol. 222, issue C

Abstract: Despite the numerous studies on the nexus between energy consumption and macroeconomic indicators in the United States (U.S.), this study still finds some notable gaps. Hence, it contributes to the literature in a number of ways. First, it comparatively examines the response of the manufacturing performance of the U.S. to sectoral energy consumption unlike existing studies that have largely been on aggregate energy use and economic growth. Second, it considers asymmetries in the relationship between energy consumption and manufacturing performance for the U.S. Third, the role of structural breaks is considered in the relationship, as the energy markets are usually susceptible to various external events that often cause structural changes. Last but not least, we employ the asymmetric panel ARDL model to examine the nexus following the heterogeneous behaviours of the sectors. Summarizing the results, we find that the U.S. manufacturing performance responds asymmetrically to sectoral energy consumption. However, the impact is only positive for the industrial and transportation sectors and negative for others. Also, structural breaks matter for the relationship. On average, the panel estimator indicates a positive influence of sectoral energy consumption on the U.S. manufacturing performance. These findings have strong policy implications.

Keywords: Energy consumption; Manufacturing performance; Asymmetries; Structural breaks; Nonlinear ARDL (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:222:y:2021:i:c:s0360544221001961

DOI: 10.1016/j.energy.2021.119947

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