The Nexus Between Energy Demand and Currency Valuation: Evidence from Selected OECD Countries

Bisharat Hussain Chang, Haitham M. Alzoubi, Asma Salman (), Ali Gohar Chang (), Mohammed Ahmar Uddin () and Jameel Ahmed Khan ()
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Bisharat Hussain Chang: Department of Business Administration, Sukkur IBA University, Sukkur, Sindh, Pakistan
Haitham M. Alzoubi: School of Business, Skyline University College, Sharjah, UAE3Applied Science Research Center, Applied Science Private University, Amman, Jordan
Asma Salman: College of Business Administration, American University in the Emirates, Dubai, UAE
Ali Gohar Chang: Principal IBA Public School Sukkur, Sindh, Pakistan
Mohammed Ahmar Uddin: Department of Finance and Economics, College of Commerce and Business Administration, Dhofar University, Salalah, Dhofar, Oman
Jameel Ahmed Khan: Department of Management Sciences, Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Larkana Campus, Larkana, Sindh, Pakistan

Annals of Financial Economics (AFE), 2024, vol. 19, issue 01, 1-23

Abstract: This study focuses on the unequal relationship between energy consumption and its determinants. Past studies have not examined how minor and substantial currency value changes affect energy consumption in the organization for economic cooperation and development (OECD) countries. This study compares the effects of modest and significant exchange rate (ER) changes on energy demand (ED) in OECD countries, which include Greece, Belgium, Ireland, Denmark, Portugal, Norway and Italy. Our work adds to the literature by distinguishing the effect of small to significant changes in currency fluctuations. We do this with a sophisticated model, an updated multiple threshold nonlinear autoregressive distributed lag (MTNARDL). Next, we compare the model’s outcomes to conventional nonlinear autoregressive distributed lag (NARDL) and autoregressive distributed lag (ARDL) models. According to NARDL and ARDL estimates, co-integration is present in the context of Belgium. However, the MTNARDL model division of series suggests cointegration in all sample countries. It implies that this model is superior to previous ones. We conclude with policy recommendations based on the results of our inquiry.

Keywords: Energy demand; exchange rates; MTNARDL model; OECD countries; asymmetry (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S2010495224500027

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