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The influence of coal price uncertainty on investment and consumption dynamics: Evidence from China

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  • Lin, Boqiang
  • Lan, Tianxu

Abstract

Coal, being a pivotal energy source in China, exerts a profound influence on investment and consumption, thereby shaping market supply-demand dynamics and economic trajectories. By employing the local projection method, this research delves into the impacts of coal price uncertainty shocks (CPU) on investment and consumption across various Chinese provinces. The key findings of the article are as follows: (1) CPU shocks exert a significant suppressive effect on both investment and consumption in China; (2) the influence of CPU on consumption and investment exhibits notable regional heterogeneity and nonlinear characteristics; (3) By integrating the regime-switching model, the study differentiates China's new energy development into high and low stages. The results demonstrate that the new energy advancement effectively alleviates the negative impacts of CPU on investment and consumption. Finally, based on these findings, the article offers targeted policy recommendations.

Suggested Citation

  • Lin, Boqiang & Lan, Tianxu, 2025. "The influence of coal price uncertainty on investment and consumption dynamics: Evidence from China," Energy Policy, Elsevier, vol. 198(C).
    • Handle: RePEc:eee:enepol:v:198:y:2025:i:c:s0301421525000242
    DOI: 10.1016/j.enpol.2025.114517
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