Quantifying stability of time–frequency phase space co-movements for renewable energy and macroeconomic markets during dual shocks

Abstract Using daily market data from January 1st, 2020, to March 31st, 2023, the coupling of renewable (RE) and nonrenewable (NRE) indices with international macroeconomic markets (IMM) of oil, gold and copper is analyzed during and after the dual shocks of COVID-19 and the Ukraine-Russia crisis for the global markets of India, China, the USA, the EU, Japan and Canada. A novel time–frequency shift measurement method called time–frequency domain modified redshift (TFDMRS) is introduced to quantify hedging stability in the RE-NRE-IMM nexus during different economic regimes to design an energy transition market stability strategy/policy. Heterogeneous behavior among RE and NRE indices was noticed in terms of phase directionality and frequency shifting across economies and regimes. Wavelet coherence and TFDMRS revealed that RE-copper interactions were blueshifted during COVID-19 and redshifted toward stable low frequencies during the Ukraine-Russia crisis for developed countries. The opposite effect occurred with gold, with RE indices being redshifted during COVID-19 with gold and blueshifting later. It was found that RE redshifts decoupled postcrisis, indicating the requirement of market reforms to influence investor actions for stable RE hedging. The most important finding is that solar technology trade mobilization enabled investors to hedge gold long-term with RE, reducing RE volatility during economic shocks. The IMM of copper benefitted developed nations’ RE market stability during the Ukraine-Russia shock and postcrisis period, fuelled by the acceleration of electric vehicle adoption. While RE-gold interactions for developing nations were minimal, RE-copper synchronization can be achieved by increasing electric vehicle penetration in developing nations’ energy markets.