EconPapers    
Economics at your fingertips  
 

Economic policy uncertainty (EPU) and firm carbon emissions: Evidence using a China provincial EPU index

Jian Yu, Xunpeng Shi (), Dongmei Guo and Longjian Yang

Energy Economics, 2021, vol. 94, issue C

Abstract: Although there have been numerous studies on economic policy uncertainty (EPU), its impact on firms' emissions has not often been examined. Using an unbalanced panel data of firms and a newly constructed provincial EPU index in China, this paper estimates the impact of EPU on manufacturing firms' carbon emission intensity. We further test the likely channels through which EPU can affect firm emission intensity, including the innovation channel, share of fossil fuels in the total energy consumption channel, and energy intensity channel. The findings show that China's provincial EPU imposes a significantly positive impact on firms' carbon emission intensity. The channel analysis shows that EPU influences carbon emission intensity through the share of fossil fuels in the total energy consumption and energy intensity in the short run, but not firm innovation. The results indicate that manufacturing firms prefer to use cheap and dirty fossil fuels to respond to the rising EPU. This paper suggests that policymakers should pay careful attention to the increasing effect of EPU on carbon emission intensity which could undermine China's emission reduction efforts and other sustainable development goals.

Keywords: Economic policy uncertainty; Carbon emissions; Energy intensity; Fossil fuel consumption; China (search for similar items in EconPapers)
JEL-codes: C23 D21 D81 O13 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320304114
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:94:y:2021:i:c:s0140988320304114

DOI: 10.1016/j.eneco.2020.105071

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-09-11
Handle: RePEc:eee:eneeco:v:94:y:2021:i:c:s0140988320304114