On conflict of natural resources-carbon emissions nexus in China: The role of economic policy uncertainty

Abstract

Environmental degradation has been an acute issue all over the world, especially in emerging economies. Being an emerging economy, China also witnesses this issue. Therefore, actions have been taken by the Chinese policymakers to wane CO2 emissions, which in turn lead to environmental degradation. However, policy actions need strong research-backed evidence on the drivers of CO2 emissions. Hence, researchers explore the determinants of CO2 emissions. Prior literature explores how economic policy uncertainty and natural resources impact CO2 emissions, however, the role of economic policy uncertainty amid the natural resource-emissions nexus remains ignored. That is, the interaction effect of EPU and NRR remains ignored in the existing literature. Hence, the present study attempts to investigate the natural resources-CO2 emissions nexus amidst economic policy uncertainty in China. The analysis adopts annual time series data covering the period 1989–2021. This study employs the novel Fourier ARDL to provide authentic outcomes. The results document that natural resources escalate emissions. Moreover, the synergy of natural resources and economic policy uncertainty also upsurges CO2 emissions. Thus, we propose to wane economic policy uncertainty to circumvent the environmental impacts of natural resources.