MODELING ENERGY SECURITY–EXCHANGE RATE LINKAGE: EVIDENCE OF GMM APPROACH

This study is an empirical attempt to revisit energy insecurity in Vietnam by focusing on the role of the official exchange rate. To this end, we gathered data of the related variables based on the 4A’s theory for energy security over the period 1985–2017, and conducted estimation using GMM estimato...

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Bibliographic Details
Published in:Singapore economic review 2021-03, Vol.66 (2), p.529-544
Main Authors: ANH, TU CHUC, RASOULINEZHAD, EHSAN, CHI, THANH NGO, BA, HUYEN LE HOANG, THANH, HANH HOANG
Format: Article
Language:English
Subjects:
Analysis
Carbon dioxide
Commodities
Currency
Depreciation
Economic growth
Economic theory
Energy
Energy efficiency
Energy policy
Foreign exchange rates
Imports
Inflation
Inflation rates
Insecurity
Knighthood
Money
Price levels
Safety and security measures
Security
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Summary:This study is an empirical attempt to revisit energy insecurity in Vietnam by focusing on the role of the official exchange rate. To this end, we gathered data of the related variables based on the 4A’s theory for energy security over the period 1985–2017, and conducted estimation using GMM estimator. The major results proved that economic growth has a positive impact on official exchange rate. CO2 emissions have negative coefficient which means negative relationship between this variable and the Vietnam’s official exchange rate, while inflation rate has a negative sign suggesting that by increase in price level of commodities in Vietnam’s economy, the domestic product will be more expensive than that before which accelerates commodities import flows that leads to depreciation of Vietnam’s national currency. In addition, we found out that energy intensity has a negative relationship with official exchange rate in Vietnam. Moreover, the results revealed that a 1% increase in gas import has a negative linkage with the Vietnam’s official exchange rate. According to the results, we recommend that Vietnam needs to diversify its gas imports, strengthen local energy production, increasing energy efficiency to have a stronger national currency against U.S. dollar which ensures energy security in this country.
ISSN:0217-5908
1793-6837
DOI:10.1142/S0217590819430021