Comparative Analysis of the Impact of Policy Uncertainty, Agricultural Output, and Renewable Energy on Environmental Sustainability

Abstract

The comparative analysis of the effect of economic policy uncertainty on environmental sustainability is imperious as it can provide critical insights into the link between economic policies and environmental sustainability. Economic policy uncertainty may have different impacts in different economies. The present study provides a comparative analysis of the effect of economic policy uncertainty on environmental sustainability in developed and emerging economies. The study employs pooled ordinary least squares and panel quantile regression to analyze data from 2001 to 2019. Moreover, the study also compares the impact of economic policy uncertainty on environmental sustainability across two different econometric methods. It also compares the results across different quantiles of the distribution of variables. Moreover, the study includes the agriculture output, renewable energy consumption, and foreign direct investment in the model. The results show that economic policy uncertainty negatively and significantly impacts environmental sustainability as it increases GHG emissions. Moreover, agriculture output increases GHG emissions in developed economies at higher quantiles. Furthermore, the results also confirm the pollution haven hypothesis, while renewable energy consumption has a positive effect on environmental sustainability as it significantly reduces GHG emissions. The study stresses that governments should take measures to minimize economic policy uncertainty to improve environmental sustainability. In addition, effective policies to enhance openness in the policymaking process and offer long-term policy certainty and foster more stable investment conditions would encourage renewable energy and reduce GHG emissions.