Impact of economic policy uncertainty on CO2 emissions: approach of the generalized method of moments (GMM)

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Jafari Mahboubeh

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Journal Paper

Paper Information

Journal: JOURNAL OF NATURAL ENVIRONMENT Year:2022 | Volume:75 | Issue:4 Page(s): 667-681

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Information Journal Paper

Title

Impact of economic policy uncertainty on CO2 emissions: approach of the generalized method of moments (GMM)

Author(s)

Jafari Mahboubeh | Issue Writer Certificate

Keywords

CO2 emission

Economic policy uncertainty

renewable energy

Nonrenewable Energy

Abstract

While a great number of researches have focused on identifying the factors affecting carbon emissions, the role of economic policy uncertainty (EPU) on environmental quality has been less studied in the energy-environment literature. In this regard, the purpose of this study is to investigate how economic policy uncertainty affects CO2 emission in the group of developing countries with the highest levels of pollution. In addition, the moderating effect of economic policy uncertainty on CO2 emissions from renewable and non-renewable energy channels has been studied. The results show that there is bidirectional causality between economic policy uncertainty and CO2 emissions. Then, a panel data model by the Generalized Method of Moments (GMM) is estimated to address the endogeneity problem. We find that increase in economic policy uncertainty has led to higher CO2 emissions. Furthermore, our findings underscore that 1 percent increase in the consumption of renewable energy has led to decrease CO2 emissions by 0.026 percent. In contrast, the consumption of nonrenewable energy has led to increase in CO2 emissions by 0.98 percent. Also, the results show that increase in economic policy uncertainty has led to a reduction in non-renewable energy consumption and thus a reduction in CO2 emissions during the period 2004 to 2020.

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