Dynamic effects of uncertainty, risks, R&D, and innovation on global economic growth

Hasibul Islam

Innovation and Green Development, 2025, vol. 4, issue 2

Abstract: For the first time, this study investigates the impact of uncertainty (Monetary Policy), risks (Climate and Geopolitical), research and development, and Innovation on economic growth. Using a dataset covering a global perspective from 1985 to 2022, this study employs dynamic time series data techniques to analyze these relationships empirically. This study reveals that monetary policy uncertainty significantly affects economic growth positively in the long run but shows no significant impact in the short run. On the other hand, geopolitical risk exhibits a significant negative relationship with economic growth over the long term, while its short-term effects are negligible. Research and development expenditures positively impact economic growth in the long run but negatively influence economic growth in the short term. Reflecting innovation outputs, patents contribute positively to economic growth consistently across different time horizons. Furthermore, climate-related risks present complex dynamics: the Transition Risk Index shows a significant negative impact on long-term economic growth while exhibiting a positive influence in the short term. Conversely, the Physical Risk Index positively impacts economic growth in the long term but negatively affects growth in the short term. These findings underscore the critical role of economic policies, Innovation, and environmental risks in shaping global economic dynamics.

Keywords: Economic growth; Geopolitical risk; Climate risk; Monetary policy uncertainty; Innovation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ingrde:v:4:y:2025:i:2:s2949753125000220

DOI: 10.1016/j.igd.2025.100225

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