Geopolitical risk and environmental degradation in BRICS: Aggregation bias and policy inference

Joshua Sunday Riti, Yang Shu and Miriam-Kamah J. Riti

Energy Policy, 2022, vol. 166, issue C

Abstract: Currently, the high incidence of environmental degradation is widely quoted as one of the key global concerns. Previous literature has examined various determinants of environmental degradation, yet, there is an inadequacy of studies on geopolitical risks (GPR) and environmental degradation nexus. Additionally, an issue of concern on aggregate estimations is aggregation bias which may cause the wrong estimation of the aggregate relationships, and mislead policymakers. This paper, therefore, investigates the impact of GPR on the environment of BRICS to assess the existence or otherwise of aggregation bias. The findings which emanate from a robust empirical estimation indicate that the relationship is positive at aggregate level while negative at disaggregated level, hence, the existence of aggregation bias in the estimation of GPR-environmental degradation relationship at the aggregate level. The results further show that the disaggregated level result does not support the aggregated level environment-GPR findings. Consequently, policy implications of aggregation bias in estimations may be drawn as follows: Since the aggregation bias may lead to a wrong environment-GPR postulation, policymakers could be misinformed by the incorrect evidence to give wrong policies about environmental concerns. Also, policymakers should consider the environment-GPR nexus at both aggregate and country-specific levels when making environmental policies.

Keywords: Geopolitical risks; Environmental degradation; BRICS; Aggregation bias; PMG/ARDL estimator (search for similar items in EconPapers)
JEL-codes: C1 D15 K32 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:166:y:2022:i:c:s030142152200235x

DOI: 10.1016/j.enpol.2022.113010

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