Do economic policy uncertainty and geopolitical risk lead to environmental degradation? Evidence from emerging economies


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Anser M. K., Syed Q. R., Lean H. H., Alola A. A., Ahmad M.

Sustainability (Switzerland), vol.13, no.11, 2021 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Volume: 13 Issue: 11
  • Publication Date: 2021
  • Doi Number: 10.3390/su13115866
  • Journal Name: Sustainability (Switzerland)
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus, Aerospace Database, CAB Abstracts, Communication Abstracts, Food Science & Technology Abstracts, Geobase, INSPEC, Metadex, Veterinary Science Database, Directory of Open Access Journals, Civil Engineering Abstracts
  • Keywords: Ecological footprint, Economic policy uncertainty, Geopolitical risk, Non-renewable energy, Renewable energy consumption
  • Istanbul Gelisim University Affiliated: Yes

Abstract

© 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses /by/4.0/).Since the turn of twenty first century, economic policy uncertainty (EPU) and geopolitical risk (GPR) have escalated across the globe. These two factors have both economic and environmental impacts. However, there exists dearth of literature that expounds the impact of EPU and GPR on environmental degradation. This study, therefore, probes the impact of EPU and GPR on ecological footprint (proxy for environmental degradation) in selected emerging economies. Cross-sectional dependence test, slope heterogeneity test, Westerlund co-integration test, fully modified least ordinary least square estimator, dynamic OLS estimator, and augmented mean group estimator are employed to conduct the robust analyses. The findings reveal that EPU and non-renewable energy consumption escalate ecological footprint, whereas GPR and renewable energy plunge ecological footprint. In addition, findings from the causality test reveal both uni-directional and bi-directional causality between a few variables. Based on the findings, we deduce several policy implications to accomplish the sustainable development goals in emerging economies.