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Energy demand response to the dynamics of the currency valuation: Evidence from G7 countries

Author

Listed:
  • Antanas Laurinavicius

    (Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania)

  • Chaleun Vongmileuth

    (UQ Business School, The University of Queensland St Lucia, QLD, Australia)

  • Sonesavanh Vongmileuth

    (Department of Innovation and Investment, One Charge New Energy and Technology Sole Co., Ltd., Chanthabouly, Vientiane Prefecture, Lao People’s Democratic Republic)

  • Algimantas Laurinavicius

    (Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania)

  • Shin-Hung Pan

    (Department of Information Management, Chaoyang University of Technology, Taiwan)

  • Bisharat Hussain Chang

    (Department of Business Administration, Sukkur IBA University, Sukkur, Sindh, Pakistan)

Abstract

[Design/methodology/approach] The study employs several traditional methodologies and the newly developed Mixed-TAR Nonlinear ARDL (MTNARDL) model to investigate long-run co-integration. Additionally, Granger causality in the quantile test is applied to enhance the robustness of the findings. [Findings] The MTNARDL model confirms the presence of long-run co-integration among all sample countries, whereas traditional methodologies fail to detect any such relationship. Furthermore, the Granger causality results reveal that the impact of exchange rate fluctuations on energy demand varies across different quantiles. [Research limitations/implications] While the study provides robust empirical insights, it is limited by the scope of available data and methodological constraints, which may require further validation in other economic settings. [Practical implications] The findings highlight the need for policymakers to design exchange rate and energy policies that account for nonlinearities and quantile-specific effects, ensuring economic stability in G7 nations. [Originality/value] This study extends the literature by integrating extreme exchange rate changes with energy demand in G7 countries, employing advanced methodologies to uncover dynamic relationships that were previously overlooked.

Suggested Citation

  • Antanas Laurinavicius & Chaleun Vongmileuth & Sonesavanh Vongmileuth & Algimantas Laurinavicius & Shin-Hung Pan & Bisharat Hussain Chang, 2025. "Energy demand response to the dynamics of the currency valuation: Evidence from G7 countries," Advances in Decision Sciences, Asia University, Taiwan, vol. 29(1), pages 1-34, March.
    • Handle: RePEc:aag:wpaper:v:29:y:2025:i:1:p:1-34
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    More about this item

    Keywords

    NARDL model; MTNARDL model; Granger causality in quantile test; traditional ARDL model;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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