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Inflation bites: The dynamic interdependence between financial market volatility and energy consumption during pandemic

Year: 2025

Type: article

Abstract: We examine how energy production, financial systems, and COVID-19 influence inflation while providing insights into cleaner energy transition policies. Using monthly data from 108 developed and developing economies from January 2017 to December 2022, we identify three key findings. First, Currency-based inflation poses a disproportionately greater threat to developing economies than to developed nations. It limits developing economies' investment opportunities in clean energy projects and constrains the speed of green technology adoption. Second, Financial instability creates unequal access to environmental and sustainable development funding, with effects that differ between developed and developing economies. Third, Energy production affects inflation differently in developing and developed economies due to significant gaps in sustainable energy infrastructure. Our results suggest that environmental policies must adapt to each country's development level to achieve both global sustainability goals and economic stability.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2025.104651

Authors: Ahmed Imran Hunjra, Muhammad Azam, Nirosha Hewa Wellalage, Tapas Mishra

Institutions: IPAG Business School, International University of Rabat, University of South Australia, University of Southampton

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Climate action, Affordable and clean energy, Decent work and economic growth, Industry, innovation and infrastructure, Reduced inequalities

Open Access status: gold

Estimated APC paid: $1,930