Welfare influences of green energy volatility in Vietnam: new evidence from an extended TVP-VAR approach

We present a study utilizing TVP-VAR – a time-varying parameter vector autoregression combined with an extended joint connectedness approach to examine the interrelationships between welfare and green energy volatility in the system of variables, including economic growth measured by gross domestic product (GDP), rural income, urban income, and renewable energy consumption. We characterize the connectedness of these variables from 19954 to 2019 in Vietnam. Net total directional connectedness of renewable energy consumption and GDP, rural-urban income suggests that both GDP and rural income have constantly been recipients of net contagion shocks, and urban income is a net critical receiver in the period 2001–2010. Renewable energy consumption consistently behaves as an important transmitter of shocks. Pairwise connectedness reveals that renewable energy consumption demonstrates a consistent shock-transmitting behavior for other variables. Renewable energy consumption could be either a transmitter or a receiver of shock from GDP, depending on the period. Our findings are critical since they will help policymakers formulate appropriate policies for reducing the vulnerabilities of these variables and minimizing the spread of risk and uncertainty among them, then improving the individuals’ welfare and obtaining ecological sustainability in the case of developing countries. © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2023.