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Does economic policy uncertainty matter for carbon emission? Evidence from US sector level data

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Abstract

Economic policy uncertainty (EPU) will affect the external business environment of economic entities, which in turn affects the decision-making of economic entities. Meanwhile, carbon emissions are closely related to the production decisions of microeconomic entities. Thus, studying the relationship between EPU and carbon emissions helps to clarify the impact of institutional factors behind carbon emissions, which is significant for achieving green development. Based on US sector data, we apply a novel parametric test of Granger causality in quantiles to analyze the relationship between EPU and carbon emissions (its growth and uncertainty). We find that there is an outstanding pattern of Granger-causality from the US EPU to the growth of carbon emissions in the tails of the growth distributions of carbon emissions in the industrial sector, residential sector, electric power sector, and transportation sector, except in the commercial sector. That is, carbon emissions are affected by EPU when the growth of carbon emissions is in a higher or lower growth period. Lastly, we find that the US EPU affects carbon emissions uncertainty over the entire conditional distribution for all sectors.

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Notes

  1. www.eia.gov/.

  2. http://www.policyuncertainty.com/

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Funding

This study was financially supported by the National Natural Science Foundation of China (Nos. 71771082, 71371067, 71431008) and the Hunan Provincial Natural Science Foundation of China (No. 2017JJ1012).

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Authors and Affiliations

  1. School of Finance, Nanjing Audit University, Yushan West Road, Nanjing, 211815, Jiangshu Province, People’s Republic of China

    Yong Jiang

  2. Business School, Hunan University, Yuelu South Road, Changsha, 410082, Hunan Province, People’s Republic of China

    Zhongbao Zhou

  3. Business School, Hunan Agricultural University, Chang Nong Road, Changsha, 410128, Hunan Province, People’s Republic of China

    Cenjie Liu

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  1. Yong Jiang
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Correspondence to Cenjie Liu.

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Jiang, Y., Zhou, Z. & Liu, C. Does economic policy uncertainty matter for carbon emission? Evidence from US sector level data. Environ Sci Pollut Res 26, 24380–24394 (2019). https://doi.org/10.1007/s11356-019-05627-8

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