On the COP26 and coal's phase-out agenda: Striking a balance among the environmental, economic, and health impacts of coal consumption.

Economic and environmental policy actions are often substitutionary in their impacts, as one man's food could be another's poison. One of the critical emphases at the recent Conference of Parties 26 (COP26) is the need for coal to be phased out in the energy consumption basket of nations to achieve environmental sustainability, but this could be at the expense of the positive performance of other socio-economic fundamentals. The best bet could then be to maintain an optimal consumption level to strike a balance. Relying on this, we examine the environmental, economic, and health impacts of coal consumption in the world's highest coal-consuming countries, putting the latter's threshold level into consideration. In summary, we find that there is a trade-off between pushing for a sustainable environment through a reduction in coal consumption and achieving better growth and health status. This implies that phasing out of coal totally will have severe economic and health costs. However, based on our threshold regression model results, it is most reasonable to maintain a lower level of coal use in the overall energy mix of these countries. This will definitely yield a relatively low level of carbon, but will still assure a certain level of economic growth and health performance. As such, reducing the intensity of coal gradually and simultaneously providing a substitute that can also serve economic and health needs are encouraged.

Commodity and financial markets' fear before and during COVID-19 pandemic: Persistence and causality analyses.

Commodity and financial markets are leading points of attraction to investors, but are very sensitive to external crises, such as financial and health crises. An example is the overwhelming plunge in the prices of the assets being traded in most of these markets during the COVID-19 pandemic. The pandemic has raised market fear beyond what is historically known, thus calling for an empirical assessment of its degree of persistence. Interestingly, the issue of persistence in financial and commodity markets has not even been generally explored in the literature. Using fractional integration approaches, our findings show that all the considered market fear indices exhibit mean reversion before COVID-19 pandemic, implying that the effect of shocks is transitory. However, persistence is higher during the pandemic period, with fear indices of the gold market (GVZ), energy sector (VXXLE) and Eurocurrency market (EVZ) reaching the unit root zone. The Granger-causality test also reveals that equity market fear due to infectious diseases (EMV-ID) and global market fear (VIX) are responsible for the fear in virtually all other markets during the current COVID-19 pandemic period. Strong policy implications are associated with these findings.

Quantiles dependence and dynamic connectedness between distributed ledger technology and sectoral stocks: enhancing the supply chain and investment decisions with digital platforms.

Distributed Ledger Technology (DLT) is highly applicable in various fields, especially the supply chain in many sectors. Against limited empirical evidence, this paper analyzes the relations between the Kensho Distributed Ledger Technology Index and stock indices of 12 sectors, including communication services, consumer discretionary, consumer staples, energy, health care, financials, industrials, information technology, materials, utilities, and real estate, and ESG by employing the quantile coherency and dynamic connectedness techniques. Our results reveal that the quantile coherency between the DLT stock index and the sectoral stock indices in almost all cases is significant and positive. The positive co-movement tends to be stronger in the longer terms and as we move from the lower to the higher quantiles, implying that they are more strongly connected in the long term and during the bearish market condition. Moreover, the dynamic connectedness indicates that the DLT stocks and the sectoral stocks are highly connected, with the former being a net transmitter of spillover shocks. The spillovers are also time-varying, and the results significantly corroborate those of the quantiles coherency methods. Among other relevant implications, DLT can be an important factor in the development and enhancement of these sectors.

Economic uncertainty of pandemic and international airlines behaviour.

This paper examines the role of uncertainty due to infectious diseases in predicting twenty International airline stocks within a nonparametric causality-in-quantiles framework. We observe that: First, the BDS test shows that nonlinearity is very important when examining the causal relationship between EMV-ID and airline stock returns and its volatility. Second, the nonparametric quantiles-based causality test shows that airline stocks predictability driven by pandemic-based uncertainty is stronger mostly around the lower quantiles, with weak evidences in middle and higher quantiles. Relevant policy implications can be drawn from these findings.

Impact of renewable energy consumption, financial development and natural resources on environmental degradation in OECD countries with dynamic panel data.

This research used panel data from 1995 to 2019 to examine the impact of financial development, natural resource, industrial production, renewable energy consumption, and total reserve on environmental degradation in (38) OECD countries by using dynamic panel data models, i.e., one-step difference GMM, one-step system GMM, and two-step system GMM model, respectively. The examined findings of one-step difference GMM, one-step system GMM, and two-step system GMM demonstrate that renewable energy consumption and natural resource help to reduce the environmental degradation while financial development, industrial production, and total reserve cause environmental degradation in OECD countries. Based on the examined results, significant policy implications are suggested to improve the environmental quality in OECD countries.

How COVID-19 drives connectedness among commodity and financial markets: Evidence from TVP-VAR and causality-in-quantiles techniques.

With many commodity and financial markets reportedly experiencing poor performances during this COVID-19 pandemic, this study intends to examine the effect of the pandemic on the connectedness among the markets. There are several reasons that suggest that apart from the pandemic affecting the performances of the markets, it can also be a driver of their connectedness, coming from the perspective of the global financial cycle channel. Therefore, we first employ the recently developed time-varying parameter vector autoregressions (TVP-VAR) technique to examine the volatility spillover among the commodity and financial assets. We find evidence of strong volatility across the markets, with gold and USD being net receivers of shocks, and others, net transmitters. With this evidence, we proceed to the evaluation of the influence of the COVID-19 pandemic on the connectedness across the markets using both the linear and non-linear (causality-in-quantiles) causality tests. The causality-in-quantiles test outperforms the linear Granger-causality test, and the results show significant causal impacts of the two measures of COVID-19 pandemic (infectious diseases-based equity market volatility and the growth rate of the U.S. COVID-19 reported cases) on the connectedness across the markets, especially at the lower and middle-level quantiles. Overall, these findings prove that the pandemic has been largely responsible for risks transmission across various commodity and financial markets. This is because it has significantly raised investors' and policy uncertainties and immensely altered global financial cycle which in turn results in global flows of capital, and movements in the prices of assets across different financial markets.