Abstract
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.
Highlights
To complement the above backdrop, the objective of this study is to explore the impact of economic policy uncertainty (EPU) and geopolitical risk (GPR) on environmental degradation in Brazil, Russia, Mexico, Colombia, and
The empirical route employed in the current study is ordered as follows
We probe the cross-sectional dependence (CD) in our data to know whether shocks in one country may spillover to other countries as these shocks may produce misleading results if they are correlated with independent variables [67]
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.Licensee MDPI, Basel, Switzerland.Attribution (CC BY) license (https://creativecommons.org/licenses/by/ 4.0/).Economic policy uncertainty (EPU) could be defined as ambiguity and/or vagueness in economic policies, and it has been escalating since the turn of twenty first century. The recent events, e.g., financial crisis, Brexit, US-China trade war, and COVID-19 pandemic have surged the EPU worldwide. According to the country reports of the International
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