Asymmetric Effect of Monetary and Fiscal Policy Uncertainty on the Energy Transition: Evidence from the United States

This research attempts to investigate how uncertainty in fiscal policy (FPU) and monetary policy (MPU) affects the US energy transition. While previous literature took the total renewable energy consumption (REC) as an indicator for the energy transition, this study uses different renewable energies across different sources, including solar, hydropower, wind, and biomass. Then, the novel multivariate quantile on quantile regression (MQQR) approach and time-varying nonparametric quantile causality (TVNQC) methods were applied in the period from 2000 to 2023. The MQOQ findings demonstrate a robust asymmetry between MPU, FPU, and all renewable energy sources, where MPU has the biggest impact, meanwhile, biomass energy has the strongest relationship. This was affirmed by TVNQC, which reveals a significant time-varying causation impact of MPU and FPU on various renewable energy sources; however, the causality becomes weaker during periods of global economic uncertainty, such as the COVID-19 pandemic and the Russia-Ukraine war. These findings provide a new insight for policymakers for addressing the energy transition and sustainability challenges.