Economic Policy Uncertainty and Carbon Emissions in Emerging Markets

Nuobu Renzhi, John Beirne and Le Ngoc Dang
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Nuobu Renzhi: Capital University of Economics and Business, Beijing
Le Ngoc Dang: Academy of Finance, Ha Noi

No 854, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper empirically examines the impact of economic policy uncertainty (EPU) on carbon emissions in 13 emerging market economies (EMEs), using panel local projections over the period 1990 to 2023. The results indicate that rising EPU significantly increases carbon emissions. However, the impact varies across economic and institutional characteristics. Specifically, EMEs with lower initial carbon emissions, higher energy intensity, carbon pricing mechanisms, greater financial development, higher trade openness, stronger political stability, greater renewable energy reliance, and higher research and development intensity exhibit a weaker response to EPU. Moreover, high-income EMEs experience a muted response in emissions, whereas lowerincome EMEs face a more pronounced impact. Additionally, EMEs with low climate vulnerability see a stronger positive response in emissions compared to their high-vulnerability counterparts. These findings highlight the critical role of institutional and structural factors in shaping the emissions response to EPU, offering important policy insights for mitigating environmental risks in uncertain economic conditions.

Keywords: economic policy uncertainty; carbon emissions; emerging market economies (search for similar items in EconPapers)
JEL-codes: O13 Q54 Q58 (search for similar items in EconPapers)
Pages: 32
Date: 2026-07-07
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:023057

DOI: 10.22617/WPS260312-2

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