Journal of Asian Economics 81 (2022) 101506

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Journal of Asian Economics

journal homepage: www.elsevier.com/locate/asieco

Will monetary policy affect energy security? Evidence from

Asian countries
Ke Wang a, Yi-Wei Wang a, Quan-Jing Wang b, *
a
School of Economics and Finance, Xi’an Jiaotong university, 76 Yanta Road, Xi’an, Shaanxi, China, 450001
b
School of Business, Zhengzhou University, 100 Kexue Road, Zhengzhou, Henan, China, 450001

A R T I C L E I N F O A B S T R A C T

JEL Classification: This paper uses the System Generalized Moments (SYS-GMM) method to empirically analyze the
E52 data of 16 Asian countries from 2000 to 2019, and finds the impact of monetary policy on energy
Q43 security. We conclude that the real interest rate, total reserve and exchange rate all have a
Keywords: positive impact on energy security, that is, when these three indicators decline, the risk of energy
Monetary policy security increases, this reminds policymakers to pay close attention to the trend of energy security
Energy saecurity
when implementing loose monetary policy. In addition, we also found that the relationship be­
GMM
tween monetary policy and energy security increased significantly after the 2008 financial crisis,
and the more developed the economy is, the more likely it is to encounter energy security
challenges brought about by changes in monetary policy. Overall, our evidences provide useful
experience for the literature related to energy security.

1. Introduction

Three oil crises broke out in the 1970 s and 1990 s, which dealt a heavy blow to the global economy. In particular, the second oil
crisis caused by Iran’s political turmoil in 1978 lasted for half a year and became one of the main reasons for the overall recession of the
western economy in the late 1970s (Bui, 2021; Hu, Chen, & Fu, 2022; Iyke, Thao, & Narayan, 2021; Kerr, 1998; Long, Chang,
Jegajeevan, & Tang, 2022; Venn, 2002). In response to the distribution of oil demand in emergencies, the International Energy Agency
(IEA) was established under the initiative of the United States. At the same time, the concept of energy security emphasizing energy
supply and reducing dependence on imported energy is becoming more and more popular. Biresselioglu et al. (2017) believe that
energy security is crucial to fast-growing economies such as Turkey, and energy intensive industrial production systems need more
stable and reliable energy supply. Amineh and Guang (2018) believe that rich coal reserves and investment in the oil and gas industry
of energy exporting countries are the main means for China to regulate energy security. With the stability of energy security, some
developing economies have become important political forces in the world. Gaddy and Ickes (2010) believed that Russia’s economy
relies too much on the export of resources (oil and gas), which increases its frequency of exposure to external shocks. In addition to
energy importing countries, energy security should also be paid attention to by exporting countries.
Recently, scholars have discussed many factors affecting energy security. Akinyemi et al. (2017) believes that the development of
renewable energy such as solar energy, wind energy and biofuels is a new growth point of international trade and energy security in the
future. Kalinichenko et al. (2019) also agree with this view and stated that the development of alternative fuels promotes energy

* Corresponding author.
E-mail addresses: 2085382048@qq.com (K. Wang), wyw4331@163.com (Y.-W. Wang), wqi9333@163.com (Q.-J. Wang).

https://doi.org/10.1016/j.asieco.2022.101506
Received 9 November 2021; Received in revised form 11 March 2022; Accepted 13 June 2022
Available online 18 June 2022
1049-0078/© 2022 Elsevier Inc. All rights reserved.
K. Wang et al. Journal of Asian Economics 81 (2022) 101506

security in terms of reducing energy dependence and meeting ecological needs. Azzuni and Breyer (2018) found that all energy storage
technologies such as Pump Hydro Storage (PHS), Thermal Energy Storage (TES), batteries, and Adiabatic Compressed Air Energy
Storage (A-CAES) are positively related to energy security. Nepal and Paija (2019) found that power consumption will increase by
4.16% for every 1% increase in population through empirical research on developing economies from 1975 to 2014, resulting in
pressure on energy security. Zhang, Wang et al. (2021) conducted an empirical study on 30 provinces in China and found that
industrialization promotes energy sustainability and has a significant positive impact on energy security, while GDP growth inhibits
energy security. At the same time, Tolliver et al. (2018) hold different views. They believe that both GDP and population growth will
increase energy consumption and increase the pressure on energy security.
From this, we can see that most of the literatures focus on the impact of energy itself on energy security, which is the most direct and
fundamental idea. Once new alternative energy is popularized, the existing energy distribution pattern will be redefined. However, the
realization of a technological breakthrough that can completely replace fossil fuels such as oil and coal is still far away (Chen, Yu, &
Wei, 2018; Feng, Yang, Gong, & Chang, 2021; Knuth, 2018; Wen, Zhao, & Chang, 2021). It is undoubtedly a more effective choice to
focus on the existing technical level to discuss the influencing factors of energy security. However, This part of the literature mostly
studies the impact of GDP, population, energy consumption, industrial capacity, etc. on energy security from the macroeconomic
perspective. Few literatures mention the impact of monetary policy. In recent years, the research on the impact of monetary policy has
focused on traditional fields such as inflation, banking system and foreign exchange market (Cepoi, Dumitrescu, Georgescu, Gher­
ghina, & Iacob, 2022; Chaudhry, Iqbal, Umar, & Faheem, 2021; Hasem, 2022; Lee & Lee, 2019; Lee, Lee, & Lien, 2019; Lee, Lee, &
Xiao, 2021; Wang, Feng, Wang, & Chang, 2021b; Yang, Feng, Zhao, & Chang, 2022; Zhao, Li, Yu, Chen, & Lee, 2022). However, the
impact of monetary policy on social economy is comprehensive and far-reaching. We have made assumptions about the mechanism by
which monetary policy affects energy security, changes of interest rate or reserve ratio causes the change of bank credit expansion
capacity, and the production cost and the difficulty of obtaining financial resources of enterprises change accordingly, which stim­
ulates the demand for energy import(or export), short-term fluctuations in energy prices and import and export volume, and finally
changes the situation of energy security. The deep logic of the impact of exchange rate on energy security is similar to that of real
interest rate and reserve. It is due to the increase of money supply caused by loose monetary policy, which stimulates energy demand,
increases fuel import rate, and finally makes the national energy system dependent on imports. If the relationship between the two
variables can be proved, it will undoubtedly make the government consider more carefully when formulating monetary policy, and
provide new ideas for solving the problem of energy security.
This research has made the following contributions: Firstly, by estimating the changes of fuel import and export and energy
consumption under the real interest rate and total reserves, we reveal the impact of monetary policy on energy security, which enriches
the literature on energy security and extends it to the field of monetary policy. Secondly, based on the System Generalized Moments
(SYS-GMM) method, we used the panel data of 16 Asian countries from 2000 to 2019 to discuss the relationship between monetary
policy and energy security, which makes our conclusions more persuasive and widely applicable. Thirdly, we got some interesting
conclusions. The real interest rate, total reserves and exchange rate all have a positive impact on energy security, that is, when these
three indicators decline, the risk of energy security increases, which reminds policymakers to pay close attention to the changes of
energy security when implementing monetary policy, especially loose monetary policy. Finally, through a series of robustness tests, we
have preliminarily solved the endogenous problem, which shows that the conclusion is statistically significant, and our model is
robust. On this basis, we also found that the relationship between monetary policy and energy security increased significantly after the
2008 financial crisis, and the more developed the economy is, the more likely it is to encounter energy security challenges brought
about by changes in monetary policy. To this end, we put forward some simple suggestions to deal with.
The reminder of this paper proceeds as follows. Section 2 introduces variables and methodology. Section 3 reports estimation
results. The last Section gives a conclusion.

2. Data and methodology

2.1. Data

2.1.1. Data source

Using the panel data of 16 Asian countries from 2000 to 2019, this study discusses the impact of monetary policy on energy se­
curity.1 Specifically, it studies whether there is an impact relationship between real interest rate, total reserves and fuel import (and
export).
The selection of Asian countries as the research object is mainly based on the following three considerations: first, the world’s
largest oil importing and exporting countries are both from Asia. Taking Asian countries as the research object can most widely cover
countries affected by energy security issues; Secondly, Asian countries are mainly developing countries, and the issue of energy se­
curity has always been highly valued by these countries. At the same time, the impact of monetary policy is also a topic of concern for
developing countries; Finally, the relative concentration of sample distribution can also exclude some regional differences.
The reason why these 16 countries are selected as samples is mainly because they include most energy importing and exporting
countries in Asia, which are highly representative. At the same time, they are the most comprehensive and reliable data available at

1
Sample countries include China, Mongolia, Philippines, Vietnam, Thailand, Indonesia, Bangladesh, Pakistan, India, Sri Lanka, Kyrgyz Republic,
Jordan, Lebanon, Georgia, Armenia, and Azerbaijan.

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present. The latest year of research data stops in 2019 because almost all countries have missing data in 2020 and 2021, especially fuel
import and export data, which makes us have to give up the research in the last two years. Nevertheless, we still believe that some basic
conclusions are sustainable and reliable.

2.1.2. Variables
(1) Dependent variables.
This study uses two variables to describe monetary policy, namely, Interest and Reserves. The higher the real interest rate, the more
savings, the less enterprise investment, the tighter the monetary policy, the lower the total reserves, the more bank loanable funds, the
more circulating money, and the looser the monetary policy. These two indicators are the operational indicators of national macro-
control. They are used to describe monetary policy accurately and comprehensively, which has been proved by literatures in recent
years. Boucinha et al. (2020) studied the impact of negative interest rate on financial market and macro-economy, and pointed out that
the evaluation of this monetary policy is generally neutral. Zhang et al. (2020) found that the Fed’s interest rate increase has a positive
impact on Chinese enterprises’ R&D investment, indicating that monetary policy has a certain transnational influence. Fuhrer et al.
(2021) provided experience to prove that the increase of reserves can reduce the loan interest margin of banks. Therefore, the central
bank can not only realize macro-control through interest rates, The amount of reserves can also affect the bank’s loan conditions and
the amount of currency in circulation.
(2) Explanatory variables.
Traditionally, energy security refers to affordable prices and adequate energy supply. However, with the global warming and the
decline of atmospheric environmental quality, environmental protection and sustainable development have gradually become an
international consensus. The signing of the "Kyoto Protocol" in 1997 marks the redefinition of the concept of energy security, energy
supply Economic competitiveness and environmental quality have become the three basic elements to ensure energy security. This
paper adopts the traditional concept of energy security, which does not involve economic competitiveness and environmental quality.
There are many literatures devoted to the research on energy security. Thorbecke (2019) takes the stability of oil price as a symbol
to measure energy security, and believes that the fluctuation of oil price will have a negative impact on the transportation, food and
industrial sectors of Asian countries. Lin and Raza (2020) predicted Pakistan’s energy security from 2012 to 2040 by using energy
import and fuel cost and other indicators, and believed that the increase of dependence on renewable energy and the decrease of oil
import rate are inevitable trends. Podbregar et al. (2020) analyzed the international energy security risk index developed by the U.S.
Chamber of Commerce, which shows that crude oil prices and global carbon reserves are sufficient to explain 90% of the variance of
the index.
In this study, Imports, Exports and Saving are used to describe energy security. Among them, Imports is the import rate of fuel.2 In
horizontal comparison of different countries, the higher the Imports, the higher the external dependence of energy, and the worse the
energy security. Exports is a supplement to imports. These two concepts are consistent. The higher the Exports, the more energy exports,
the lower the external dependence, and the better the energy security. The full name of Saving is adjusted savings: energy depletion (%
of GNI), in which energy depletion refers to the ratio of the value of the stock of energy resources to the remaining reserve lifetime.3
Under the condition of constant energy stock, the larger the remaining reserve, the smaller the saving value, the more secure the energy
security.
(3) Control variables.
Price_Diesel: Oil price is often the key factor determining energy security (Amadi et al., 2021; Kalinichenko et al., 2019). According
to Thorbecke (2019), the stability of oil price directly affects the national economic operation and is an important guarantee for energy
security. In this paper, diesel price and gasoline price (Price_Gasoline) are selected to control the impact of oil price fluctuation on
energy security.
GDP: The level of economic development is closely related to international status, international reputation, solvency, energy
mining technology and energy use efficiency, which is the basic guarantee of energy security (Chang, Feng, & Zheng, 2021; Gökgöz &
Güvercin, 2018; Lu et al., 2019; H.J. Wang, An, & Zheng, 2021a; Q.J. Wang, Feng, Wang, & Chang, 2022b). Therefore, we use the
constant US dollar per capita GDP in 2010 to control it, and take logarithm of this variable in the empirical process.
Renewable energy: The use of renewable energy is conducive to reducing the external dependence on fossil fuels, so as to improve
energy security. Wang et al. (2018) found that there is a strong cooperative effect between China’s renewable energy development and
energy security by using the Divisia index method. A sustained renewable energy policy will ensure the further development of energy
security. Hamed and Bressler (2019) predicted that although the cooperation between Israel and Jordan in the field of renewable
energy can achieve the target of 10% energy supply by 2020, there is no doubt that the cooperation between the two countries has
greatly improved their energy security.
Armed forces: Military strength is not only the embodiment of international status and comprehensive strength, but also the bottom
guarantee of national energy security. Jakstas (2020) believes that military strength is an important factor affecting energy security
and provides effective help in anti risk. We use armed forces personality (% of total labor force) to describe a country’s military
strength, which is comparable.
Table 2 shows the descriptive statistical results of dependent variables, explanatory variables and control variables. It can be seen
that Imports average 17.964%, much higher than 11.902% of Exports, but the standard deviation of the two is just the opposite. The

2
The contents of Imports are included in Section III of the SITC (mineral fuels, lubricants and related materials).
3
It covers coal, crude oil, and natural gas.

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K. Wang et al. Journal of Asian Economics 81 (2022) 101506

import standard deviation is only 7.996, while the export is as high as 21.831, which means that the demand difference of the sample
countries in import is small, but the demand is higher than the export, while the export is only in the hands of a few countries, so the
difference of fuel export is much higher than that of import, this shows that there are great hidden dangers in energy security, which is
worthy of further study. This can also be seen from the data of energy savings. The average energy savings of the sample countries are
2.286, and the standard deviation is 4.979. The gap in extreme values is also very wide, which fully shows the imbalance of energy
distribution in Asian countries. In terms of monetary policy, the strategies adopted by different countries also have variability, in which
the lowest Interest is − 13.730% and the highest is 47.999%, and the standard deviation of Reserves is as high as 69.940, which provides
a guarantee for studying the possibility of energy security under different monetary policies.

2.2. Methodology

The model is constructed as follows:

ESi,t = α0 + α1 MPi,t + γZi,t + μi + υi + εi,t (1)

In the above equation, ES on the left side of the equation represents energy security, including Imports, Exports and Saving. MP on
the right side of the equation is Monetary Policy index, including Interest and Reserves. Z means other control variables affecting energy
security, including Price_Diesel, Price_Gasoline, GDP, Renewable energy and Armed forces. μi refers to the time fixed effect variable, υi
refers to the regional fixed effect variable and εi,t refers to error term.
GMM model is helpful to solve the problems of dependent variable dynamics and independent variable endogeneity in the fixed
effect model. Compared with DIF-GMM, the system GMM will not lose the individual effects of missing observation sections and other
variables that do not change with time when there is a difference, and sometimes the variable lag order is not an ideal instrument
variable. (Arellano & Bover, 1995; Blundell & Bond, 1998; Fu, Chen, Jang, & Chang, 2020; Wang, Wang, & Chang, 2022a; Zheng,
Feng, Jang, & Chang, 2021; Zhao, Zheng, & Fu, 2022; Fu et al., 2021; Wang et al., 2022a; Zheng et al., 2021; Zhao et al., 2022). The
specific model is as follows:
ESi,t = α0 + α1 ESi,t− 1 + α2 MPi,t + γZi,t + εi,t (2)

In Eq. (2), ESi,t− 1 represents the lagged value of Imports, Exports and Saving. The definition of other variables is consistent with
formula (1).

3. Empirical results

3.1. Basic results

We use the two methods of Augmented Dickey Fuller unit root test (ADF, 2001) and Phillips Perron unit root test (PP, 2001) to test
the unit root of the data to ensure its stability. The results are shown in Table 3. Except for Reserves, all variables are significant at least
at the 10% level, follow the I (1) process and meet the conditions of model estimation.
Table 4 shows the estimation results of two monetary policy variables (Interest and Reserves) on three energy security variables
(Imports, Exports, and Saving). Column (1) shows that Interest has a negative significance of 5% on Imports, with a coefficient of
− 0.169%, indicating that the fuel import rate decreases by 0.169% every time the real interest rate increases by 1%, resulting in the
progress of energy security. According to Tambari and Failler (2020), the impact of interest rates on Renewable Energy Investment
(REI) in African countries is positive, that is, the increase of interest rates will promote the development of energy security, which is
consistent with our conclusion, Radovanović et al. (2018) and Hesary et al. (2019) also support this view. In addition, the Interest in
column (5) also has a negative significance on Saving at the level of 1%, with a coefficient of − 0.236%, indicating that the increase of
Interest will reduce the Saving value. According to the previous definition of Saving, the smaller the value is, indicating that when the
energy stock is constant, the larger the remaining reserve is, the higher the degree of energy security is.
For Reserves, it seems that the impact on Imports and Saving is not significant. Only Exports in column (4) shows positive significance

Table 1
Variable Definitions and Data Sources.
Variable Definition Source

Imports Fuel imports (% of merchandise imports) World Development Indicators. WDI

Exports Fuel exports (% of merchandise exports) World Development Indicators. WDI
Saving Adjusted savings: energy depletion (% of GNI) World Development Indicators. WDI
Interest Real interest rate (%) World Development Indicators. WDI
Reserves Total reserves (% of total external debt) World Development Indicators. WDI
Price_Diesel Pump price for diesel fuel (US$ per liter) World Development Indicators. WDI
Price_Gasoline Pump price for gasoline (US$ per liter) World Development Indicators. WDI
GDP GDP per capita constant at 2010 US dollars World Development Indicators. WDI
Renewable energy Renewable energy consumption (% of total final energy consumption) World Development Indicators. WDI
Armed forces Armed forces personnel (% of total labor force) World Development Indicators. WDI

Notes: WDI at https://data.worldbank.org/indicator.

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K. Wang et al. Journal of Asian Economics 81 (2022) 101506

Table 2
Descriptive Statistics.
Variable Observations Mean Std Dev Min Max

Imports 305 17.964 7.996 0.861 39.518

Exports 306 11.902 21.831 0.006 97.082
Saving 320 2.286 4.979 0 30.593
Interest 310 6.714 7.008 -13.730 47.999
Reserves 317 63.576 69.940 5.301 539.673
Price_Diesel 320 0.641 0.283 0.060 1.421
Price_Gasoline 320 0.815 0.301 0.170 1.563
GDP 320 2927.07 1814.244 524.945 8242.055
Renewable energy 256 27.764 19.050 1.687 64.156
Armed forces 303 1.858 1.802 0.295 11.455

Table 3
Panel Unit Root Tests.
Variable ADF PP

Imports 6.701 * ** 7.683 * **

Exports 6.205 * ** 6.530 * **
Saving 7.931 * ** 15.196 * **
Interest 5.851 * ** 18.461 * **
Reserves 4.160 3.511
Price_Diesel 4.483 * 3.658
Price_Gasoline 7.550 * ** 3.999 * *
GDP 4.895 * * 2.395
Renewable energy 4.899 * * 1.287 *
Armed forces 6.943 * ** 7.123 * **

Notes: t statistics in parentheses. * p < 0.1, * * p < 0.05, * ** p < 0.01.

Table 4
GMM Estimator for Full Samples. Dependent Variables: Imports, Exports and Saving.
Variable Imports Exports Saving

(1) (2) (3) (4) (5) (6)

L. Dependent variable 0.517 * ** 0.487 * ** 1.045 * ** 1.011 * ** 0.836 * ** 0.733 * **

(7.75) (6.97) (38.46) (36.14) (21.71) (17.39)
Interest -0.169 * * -0.203 * ** -0.236 * **
(− 2.21) (− 4.94) (− 11.28)
Reserves 0.005 0.496 * ** 0.006
(0.44) (3.96) (1.58)
Price_Diesel 2.319 1.145 5.944 * * 10.082 * ** -2.282 2.371
(0.41) (0.22) (1.86) (2.83) (− 1.05) (1.06)
Price_Gasoline 3.342 3.384 -1.377 -7.404 * * 0.581 -4.849 * *
(0.66) (0.75) (− 0.48) (− 2.29) (0.772) (− 2.39)
GDP -3.285 * ** -0.118 -2.239 * * -2.587 * * 0.288 * 0.189
(− 2.88) (− 0.42) (− 2.36) (− 2.50) (1.66) (0.83)
Renewable energy 0.053 0.133 * ** -0.021 -0.015 -0.045 * ** -0.024
(1.12) (3.38) (− 0.36) (− 0.25) (− 2.79) (− 1.40)
Armed forces 2.161 * ** 1.752 * ** 2.091 * * 1.394 1.793 * ** 2.371 * **
(3.36) (3.03) (2.37) (1.56) (2.61) (2.65)
Sargan (p-value) 1.000 1.000 1.000 1.000 1.000 1.000
AR (1) (p-value) 0.000 0.000 0.000 0.000 0.000 0.000
AR (2) (p-value) 0.009 0.012 0.350 0.047 0.753 0.972
N 222 229 224 231 232 239

Notes: t statistics in parentheses. * p < 0.1, * * p < 0.05, * ** p < 0.01

at the level of 1%, with a coefficient of 0.496, indicating that for every 1% increase in the total reserve, the fuel export rate increases by
0.496%. The more Exports, the lower the external dependence and the higher the energy security, which is in line with our expec­
tations. Reserves indirectly affect the money supply by affecting the bank’s credit expansion ability (Adak, 2017; Su et al., 2017), and
their impact on energy imports lags behind. We believe that this is the main reason why they are not sensitive to the real interest rate of
energy security indicators.
The last four rows in Table 4 are Sargan test, first-order (AR1), second-order (AR2) autocorrelation Arellano-Bond test and the
number of observations. It can be seen that in all cases, the p-value of Sargan test is not significant, indicating that there is no over
identification of instrumental variables. AR1 shows that all variables are significant at the 1% level. In this case, it is necessary to reject

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K. Wang et al. Journal of Asian Economics 81 (2022) 101506

the original hypothesis. The first-order difference of the error term is relevant, so it is reasonable to take the dynamics of the dependent
variable into account, while AR2 is not significant in most cases, indicating that the high-order difference of the error term has nothing
to do with the original hypothesis, so the results are consistent. All three tests prove the reliability of the conclusion.

3.2. Robustness test

In order to further test the robustness of the conclusion and further understand the relationship between monetary policy and
energy security, we have conducted four additional robustness tests in Table 5, adding new dependent variables to Panel A and new
intermediate variables of monetary policy to Panel B, Panel C’s sub-sample regression before the financial crisis and Panel D’s sub-
sample regression of the countries with the lowest 50% per capita GDP in 2020.
In Panel A, we use Energy Imports to describe energy security.4 The higher the value, the higher the net energy import rate, the
higher the external dependence, and the lower the energy security. The results show that Interest and Reserves have negative significant
effects on Energy Imports at least at the level of 10%, and the coefficients are − 0.536% and − 0.203% respectively, indicating that the
increase of real interest rate and total reserves will reduce the energy import rate and improve the degree of energy security, which is
consistent with our main conclusions.
Panel B we use the new intermediate variable Exchange to describe monetary policy.5 Because the value of this variable is large, we
take logarithm in the empirical process. When the exchange rate increases, the local currency depreciates, the import rate of com­
modities including energy decreases, and energy security is improved. The results are basically in line with expectations. Exchange has
a significant negative impact on Imports and Saving at least 10%. The higher the exchange rate, the higher the energy security. Exchange
is not significant to Exports. We believe that the reason for this result is that the export rate is not only determined by domestic supply,
but also limited by the demand of importing countries, and the fluctuation of domestic exchange rate is difficult to affect the demand of
importing countries.
The global financial crisis has had a serious impact on both energy importing and energy exporting countries (Gaddy & Ickes, 2010;
Wang, 2010). In order to eliminate its interference, Panel C selects the sub-sample data before the 2008 financial crisis for regression,
and extends the beginning of the period to 1990 to increase the number of observations. The results show that Exports and Saving are
significant at least 10% of the two monetary policy variables, while Imports are not significant, indicating that the monetary policies of
Asian countries had no impact on energy import before the financial crisis. We put forward a hypothesis for this phenomenon. Before
the financial crisis, energy supply was relatively stable, countries imported on demand, and after the financial crisis, countries’
awareness of energy security increased, and the response to monetary policy is more sensitive.
Finally, in Panel D, we estimated the sub-sample data of the countries with the bottom 50% of per capita GDP. The low-income
countries have fragile energy security and poor anti risk ability. However, these countries are more representative and research
value all over the world. The results are basically consistent with the main conclusions, but the Interest of low-income countries has no
significant impact on Imports, and the coefficients of other significant impact relations are generally lower than the total sample. We
can conclude that the lower the level of economic development, the lower the impact of monetary policy on energy security.

4. Concluding remarks

This paper collects the panel data of 16 Asian countries from 2000 to 2019, and uses the System Generalized Moments (SYS-GMM)
method to explore the relationship between monetary policy and energy security. Specifically, we study the impact of real interest rate
and total reserves on fuel import and export rate and energy consumption. The results show that the higher the real interest rate and
total reserves, the higher the production cost of enterprises, the higher the difficulty of obtaining financial resources, the lower the
import demand for fuel, the lower the external dependence of energy and the higher the energy security. However, the evidence
provided by the sub-sample shows that the monetary policy before the financial crisis has no impact on the fuel import rate, which
enlightens that our countries’ awareness of energy security has generally increased after the financial crisis, and the transmission
mechanism of the impact of monetary policy on energy security is playing an increasingly important role. However, it is not advisable
to raise interest rates recklessly in order to meet the needs of energy security, which may cause serious damage to the macro-economy.
Improving energy security by increasing total energy savings is a healthier approach. Specifically, we should find savings participants
that meet the national conditions of all countries and increase the types and quantity of savings, On the one hand, the goal is to improve
the operation efficiency of energy savings. On the other hand, we should make good use of every fund invested by the government in
energy savings as much as possible.
In addition, we found that the reduction of exchange rate may also bring energy security risks. The deep logic is similar to that of
real interest rate and reserve. It is due to the increase of money supply caused by loose monetary policy, which stimulates energy
demand, increases fuel import rate, and finally makes the national energy system dependent on imports. In this regard, we believe that
in the long run, we should try our best to expand exports and form a trade surplus, which is conducive to the rise of the exchange rate

4
Definition of Energy imports, net (% of energy use): Net energy imports are estimated as energy use less production, both measured in oil
equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy.
5
Definition of Official exchange rate (LCU per US$, period average): Official exchange rate refers to the exchange rate determined by national
authorities or to the rate determined in the legally sanctioned exchange market. It is calculated as an annual average based on monthly averages
(local currency units relative to the U.S. dollar).

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Table 5
Robustness Test - Result by Using New Variables and Sub-Samples.
Panel A: New dependent variable

Variable Energy imports

L. Dependent variable 0.839 * ** 0.817 * **

34.20 23.40
Interest -0.536 *
(− 1.92)
Reserves -0.203 * *
(− 2.02)
N 215 222
Panel B: New explanatory variable
Variable Imports Exports Saving
L. Dependent variable 0.336 * ** 1.101 * ** 0.648 * **
(4.13) (32.65) (12.89)
Exchange -0.001 * -0.001 -0.705 * **
(− 1.93) (− 1.64) (− 4.27)
N 225 227 233
Panel C: Before the financial crisis (1990–2008)
Variable Imports Exports Saving
L. Dependent variable 0.443 * ** 0.545 * ** 0.967 * ** 0.974 * ** 0.845 * ** 0.909 * **
(5.43) (0.53) (47.69) (48.04) (20.32) (25.09)
Interest 0.091 0.076 * -0.093 * **
(1.02) (1.80) (− 2.79)
Reserves 0.010 0.029 * * -0.012 * *
(0.53) (2.11) (− 1.99)
N 182 204 185 207 195 225
Panel D: 50% of countries with low GDP
Variable Imports Exports Saving
L. Dependent variable 0.611 * ** 0.512 * ** 1.007 * ** 0.989 * ** 0.857 * ** 0.670 * **
(7.34) (5.83) (42.36) (40.83) (21.52) (9.96)
Interest 0.046 -0.138 * ** -0.211 * **
(0.64) (− 2.87) (− 8.35)
Reserves -0.074 * * 0.059 * ** 0.052 * **
(− 2.55) (3.31) (3.76)
N 110 112 112 112 118 120

Notes: Same as Table 4. The 50% of countries selected in Panel D are Mongolia, Sri Lanka, Kyrgyz Republic, Jordan, Lebanon, Georgia, Armenia, and
Azerbaijan.

and improve energy security. Similarly, reducing the relative inflation rate and maintaining a good macro-economy can also promote
the healthy development of the exchange rate and play a beneficial role in energy security. And we also find that this dependence will
increase with the development of national economic development level and per capita income, and the more developed countries have
to face severe challenges. Therefore, from the perspective of energy security, we suggest that monetary policy should be implemented
carefully. Especially when loose monetary policy stimulates the economy, we should be alert to the dynamics of energy security,
actively develop domestic advantageous energy, expand reserves and increase investment in renewable energy research and devel­
opment, so as to avoid excessive dependence on other countries’ energy.

Declaration of Competing Interest

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to
influence the work reported in this paper.

Acknowledgements

This research is supported by the China Postdoctoral Science Foundation (funding number: 2021M702961), Key R&D and Pro­
motion Special (Soft Science Research) Project of He’ nan (funding number: 222400410144).

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