Monetary Policy Uncertainty and Green Finance Resilience: A Wavelet Quantile on Quantile Approach in Developed Economies

This study investigates the asymmetric relationship between Monetary Policy Uncertainty (MPU) and Green Finance (GFN) in G7 economies, leveraging monthly data from January 2000 to December 2023. By employing advanced econometric techniques, including Wavelet Quantile-on-Quantile Regression (WQQR) and the Wavelet Quantile-on-Quantile Granger Causality test, the analysis uncovers dynamic interactions across various time scales and quantiles. The results reveal a significant bidirectional causality, indicating that fluctuations in MPU influence GFN, while shifts in GFN also affect MPU. These findings underscore the critical interplay between monetary policy and sustainable finance, offering actionable insights for policymakers and stakeholders to enhance green investment strategies amidst economic uncertainties. The study contributes to the achievement of SDG 13 (Climate Action) by emphasizing the role of GFN in addressing climate challenges and SDG 8 (Decent Work and Economic Growth) by promoting stable economic frameworks for sustainable development.