Do economic policy uncertainty and geopolitical risk surge CO₂ emissions? New insights from panel quantile regression...

In recent times, economic policy uncertainty (EPU) and geopolitical risk (GPR) are increasing significantly where the economy and environment are affected by these factors. Therefore, the goal of this paper is to investigate whether EPU and GPR impede CO₂ emissions in BRICST countries. We employ second-generation panel data methods, AMG and CCEMG estimator, and panel quantile regression model. The conclusions document that most of the variables are integrated at I (1), and there exists co-integration among considered variables of the study. Moreover, we note that EPU and GPR have a heterogeneous effect on CO₂ emissions across different quantiles. EPU adversely affects CO₂ emissions at lower and middle quantiles, while it surges the CO₂ emissions at higher quantiles. On the contrary, geopolitical risk surges CO₂ emissions at lower quartiles, and it plunges CO₂ emissions at middle and higher quantiles. Furthermore, GDP per capita, renewable energy, non-renewable energy, and urbanization also have a heterogeneous impact on CO₂ emissions in the conditional distribution of CO₂ emissions. Based on the results, we discuss the policy direction.