Asymmetric association between supply chain bottlenecks and consumer energy prices: Evidence from quantile-on-quantile approach

Abstract

Soaring energy prices and supply chain bottlenecks (SCB) have a complex and intricate nexus shaped by global uncertainties. This relationship exhibits heterogeneity and nonlinearity due to varying energy dependencies, economic structures, and supply chain developments across nations. Given this, we explore the asymmetric interplay between SCB and consumer energy prices (CEP) for selected economies, including Japan, South Korea, the United States, and the United Kingdom. Employing quantile-on-quantile regression on monthly data from 1997 to 2022. The findings exhibit that SCB positively correlates CEP at higher quantiles of energy prices with prominent effects in the US and weaker effects in Japan, Korea, and the UK, SCB reveals a negative nexus with CEP at lower quantiles of energy prices. The findings imply that supply chain disruptions exacerbate energy prices during periods of high volatility, while initial levels of SCB reduce energy prices due to dampened energy demand. On the flip side, CEP mitigates SCB in Japan and the US across all quantiles of the supply chain pressure. Unlike them, the UK and Korea show different outcomes, where CEP amplifies SCB at all quantiles of the supply chain. Overall, the findings underscore the need for country-specific sustainable energy policies and resilient supply chain management strategies.