Monetary policy shocks and sectoral heterogeneity in clean energy markets
Year: 2025
Type: article
Abstract: Clean energy transitions are central to achieving global sustainability goals, yet their progress depends partly on how macroeconomic forces shape green financial markets. This paper investigates the impact of US monetary policy shocks on nineteen clean energy stock indices from 2010 to 2023. Using panel factor models and structural Bayesian VARs, we identify a significant common factor that explains up to 60% of the sectoral variation. However, sectoral responses are heterogeneous: energy storage, green IT, and wind stocks react positively, while smart grid, green building, and transportation stocks respond negatively to monetary policy shocks. These results indicate that monetary policy can shift resources toward specific clean energy sectors but also reveal the vulnerability of other sectors to financial conditions, creating potential barriers to achieving environmental objectives. • US monetary policy shocks exhibit significant effects on nineteen clean energy stock indices. • The analysis combines a panel factor model and a structural BVAR to identify monetary policy shocks. • The common factor of clean energy stock indices explains up to 60% of the data and responds positively to monetary tightening. • Clean energy sectors and subsectors display substantial heterogeneity in their responses to monetary policy shocks. • Heterogeneous sectoral effects warrant integrating clean energy dynamics into the central banks' policy toolkit.
Author: Yacoub Sleibi
Institution: Swansea University
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,750
OpenAlex ID: W4415835874