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

Antanas Laurinavicius; Chaleun Vongmileuth; Sonesavanh Vongmileuth; Algimantas Laurinavicius; Shin Hung Pan; Bisharat Hussain Chang

doi:10.47654/v29y2025i1p1-34

Authors

Antanas Laurinavicius Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania Author
Chaleun Vongmileuth UQ Business School, The University of Queensland St Lucia, QLD, Australia Author
Sonesavanh Vongmileuth Department of Innovation and Investment, One Charge New Energy and Technology Sole Co., Ltd., Chanthabouly, Vientiane Prefecture, Lao People's Democratic Republic Author
Algimantas Laurinavicius Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania Author
Shin-Hung Pan Department of Information Management, Chaoyang University of Technology, Taiwan Author
Bisharat Hussain Chang Department of Business Administration, Sukkur IBA University, Sukkur, Sindh, Pakistan Corresponding Author

DOI:

https://doi.org/10.47654/v29y2025i1p1-34

Keywords:

NARDL model, MTNARDL model, Granger causality in quantile test, traditional ARDL model

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.

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