The role of institutional factors in shaping the relationship between economic policy uncertainty and energy consumption in Gulf countries: an empirical analysis

Abstract

Purpose

This research investigates the complex relationship between economic policy uncertainty (EPU), energy consumption and institutional factors in the Gulf region. The purpose of this study is to examine how institutional factors moderate the impact of EPU on energy consumption in Gulf countries.

Design/methodology/approach

This paper uses the dynamic panel autoregressive distributed lag (PARDL) method, over a period stretching from 1996 to 2021 in the Gulf countries.

Findings

The results show that, only in the long term, EPU has a positive and significant impact on energy consumption, suggesting that increased EPU leads to increased energy use. Furthermore, this study found that, only in the long term, government effectiveness and regulatory quality have positive and significant effect on energy consumption. Accordingly, the two institutional factors play a moderating role in the EPU−energy consumption nexus.

Research limitations/implications

This study highlights the importance of considering the time dimension when formulating energy and economic policies in Gulf countries. Policymakers should take into consideration the nature of these relationships to make informed decisions that promote energy efficiency and economic stability in the region.

Originality/value

To the best of the authors’ knowledge, this is the first study examining the relationship between EPU and energy consumption in the Gulf countries while incorporating the role of institutional factors as potential mediators.