The Heterogeneity Research of the Impact of EPU on Environmental Pollution: Empirical Evidence Based on 15 Countries

Abstract

While economic growth has been the main goal of countries around the world, environmental problems such as air pollution have also arisen. Since the increase in economic uncertainty is limiting production capacity and consumers’ marginal propensity to consume, which reduces CO2 emissions, economic policy uncertainty has become one of the most important factors affecting CO2 emissions. COVID-19 has demonstrated that economic policy uncertainty reduces the enthusiasm of market participants, which, in turn, reduces energy demand and CO2 emissions. In order to further study the impact of economic policy uncertainty on air pollution, this study uses a panel model to empirically test the data for a sample of 15 countries covering the period from 1997 to 2019. According to the empirical results, we find that the economic policy uncertainty has a significant negative impact on per capita CO2 emissions. That is, the higher the uncertainty of economic policy, the lower the per capita CO2 emissions of countries. What’s more, this negative effect is larger in emerging market countries than in advanced countries.