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

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.

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Evidence of Economic Policy Uncertainty and COVID-19 Pandemic on Global Stock Returns

Journal of Risk and Financial Management ◽

10.3390/jrfm15010028 ◽

2022 ◽

Vol 15 (1) ◽

pp. 28

Author(s):

Thomas Chinan Chiang

Keyword(s):

Economic Policy ◽

Stock Returns ◽

Stock Return ◽

Negative Impact ◽

Global Market ◽

Policy Uncertainty ◽

Economic Policy Uncertainty ◽

The Impact ◽

Global Stock ◽

The U.S

This paper examines the impact of changes in economic policy uncertainty (EPU) and COVID-19 shock on stock returns. Tests of 16 global stock market indices, using monthly data from January 1990 to August 2021, suggest a negative relation between the stock return and a country’s EPU. Evidence suggests that a rise in the U.S. EPU causes not only a decline in a country’s stock return, but also a negative spillover effect on the global market; however, we cannot find a comparable negative effect from global EPU to U.S. stocks. Evidence suggests that the COVID-19 pandemic has a negative impact that significantly affects stock return worldwide. This study also finds an indirect COVID-19 impact that runs through a change in domestic EPU and, in turn, affects stock return. Evidence shows significant COVID-19 effects that change relative stock returns between the U.S. and global markets, creating a decoupling phenomenon.

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How and when economic policy uncertainty influences firms' strategic change: the role of CEO turnover and organizational inertia

International Journal of Emerging Markets ◽

10.1108/ijoem-02-2021-0273 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Xi Zhong ◽

Weihong Chen ◽

Ge Ren

Keyword(s):

Economic Policy ◽

Strategic Change ◽

Negative Impact ◽

Ceo Turnover ◽

Mediating Effect ◽

Policy Uncertainty ◽

Content Type ◽

Economic Policy Uncertainty ◽

Organizational Inertia ◽

The Impact

PurposeMany studies have examined the antecedents of firms' strategic change on a micro and meso level, but few studies have explored it from the macrolevel (e.g. economic policy uncertainty) perspective. This research draws attention to the impact of economic policy uncertainty on firms' strategic change.Design/methodology/approachThis research empirically tests hypotheses based on a sample of listed firms in China during the period between 2010 and 2017.FindingsBased on real options theory, the authors theorize and find that economic policy uncertainty will negatively affect firms' strategic change through the mediating effect of CEO turnover. Moreover, organizational inertia will strengthen the negative impact of economic policy uncertainty on CEO turnover and will weaken the positive impact of CEO turnover on firms' strategic change.Originality/valueFirst, this research contributes to the strategic change literature by demonstrating the important impact of economic policy uncertainty on firms' strategic change. Second, this research expands the literature on the economic consequences of economic policy uncertainty. Third, this research clarifies the path and boundary conditions of economic policy uncertainty affecting strategic change by introducing the mediating effects of CEO turnover and the moderating effects of organizational inertia.

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How Does China’s Economic Policy Uncertainty Affect the Sustainability of Its Net Grain Imports?

Sustainability ◽

10.3390/su13126899 ◽

2021 ◽

Vol 13 (12) ◽

pp. 6899

Author(s):

Yuee Li ◽

Jingdong Li

Keyword(s):

Economic Policy ◽

Environmental Sustainability ◽

Negative Impact ◽

Virtual Water ◽

Policy Uncertainty ◽

Trade Cost ◽

Economic Policy Uncertainty ◽

Embodied Carbon ◽

Significant Negative Impact ◽

The Impact

China is a considerable grain importer in the world. However, the sustainability of China’s grain imports has been greatly challenged by its increasing economic policy uncertainty (EPU). This paper constructs the indicators of economic and environmental sustainability of China’s net grain imports and analyzes the impact of its EPU index on these indicators with a Time-Varying Parameter Stochastic Volatility Vector Autoregression (TVP-SV-VAR) model to explore how China’s EPU affects the sustainability of its net grain imports. The main conclusions are as follows. (1) The sustainability of China’s net grain imports fluctuated from 2001 to 2019. (2) China’s EPU has a negative impact on the economic sustainability of its net grain imports. A higher EPU index leads to a lower net import potential ratio and higher trade cost. (3) China’s EPU has a significant negative impact on the environmental sustainability of its net grain imports. It has the greatest negative impact on virtual water imports and smaller impact on virtual land imports and embodied carbon emission. Therefore, China’s EPU affects the sustainability of its net grain imports negatively through its impact on its net grain import potential ratio, trade cost, and virtual land, virtual water, and embodied carbon emissions in net grain imports.

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Understanding the effects of economic policy uncertainty on US tourism firms’ performance

Tourism Economics ◽

10.1177/1354816620983148 ◽

2021 ◽

pp. 135481662098314

Author(s):

Conrado Diego García-Gómez ◽

Ender Demir ◽

Ming-Hsiang Chen ◽

José María Díez-Esteban

Keyword(s):

Economic Policy ◽

Firm Performance ◽

Negative Impact ◽

Generalized Method Of Moments ◽

High Growth ◽

Policy Uncertainty ◽

Tobin’S Q ◽

Tobin's Q ◽

Economic Policy Uncertainty ◽

The Impact

This study analyzes the impact of economic policy uncertainty (EPU) on the performance of US tourism firms using a sample of 296 publicly traded tourism companies from 2000 to 2018 with a sample of 3068 firm-year observations. Estimation results of panel regressio tests based on the system-generalized method of moments indicate that EPU has a negative impact on return on assets (ROA), return on equity (ROE), and Tobin’s Q. Our results are consistent for different variable specifications. We also find that firm size and leverage play a moderating role in the relationship between EPU and firm performance. Panel quantile regression results show that the impact of EPU on US tourism firm performance is asymmetric. Specifically, low-performing (25% quantile of ROA and ROE) firms are less affected by EPU, and for the case of Tobin’s Q, EPU does not affect firms with a high growth opportunity (100% quantile of Tobin’s Q).

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Economic policy uncertainty, market returns and expected return predictability

Journal of Financial Economic Policy ◽

10.1108/jfep-11-2016-0074 ◽

2017 ◽

Vol 9 (3) ◽

pp. 242-259 ◽

Cited By ~ 10

Author(s):

Frederick A. Adjei ◽

Mavis Adjei

Keyword(s):

Economic Policy ◽

Predictive Power ◽

Negative Impact ◽

Future Market ◽

Policy Uncertainty ◽

Market Returns ◽

Expected Return ◽

Content Type ◽

Economic Policy Uncertainty ◽

The Impact

Purpose Using the economic policy uncertainty (EPU) index as a proxy for the level of EPU, we study the impact of the level of EPU on the conditional mean of market returns and we examine the predictive power of EPU on future market returns. Design/methodology/approach We employ a GARCH-in-Mean model with exogenous variables. Findings The results show that even after controlling for business cycle effects, EPU is inversely related to contemporaneous market returns. Particularly, the authors find that the negative impact of EPU subsists only during recessions or recessionary states of the economy, and has no discernible effects during expansionary periods. Originality/value This is the first study to examine the predictive power of EPU on future market returns.

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Economic policy uncertainty and investment of Russian companies

Voprosy Ekonomiki ◽

10.32609/0042-8736-2020-2-141-159 ◽

2020 ◽

pp. 141-159

Author(s):

Iuliia N. Naidenova ◽

Veronika V. Leonteva

Keyword(s):

Economic Policy ◽

Fixed Effects ◽

Negative Impact ◽

Corporate Investment ◽

Policy Uncertainty ◽

Manufacturing Companies ◽

Investment Activity ◽

Public Companies ◽

Economic Policy Uncertainty ◽

The Impact

This paper is devoted to determining the impact of economic policy uncertainty on corporate investment of Russian manufacturing companies. By applying fixed effects models on panel data, it was found that under increasing level of economic policy uncertainty, the companies reduce their investment activity. The effect is most pronounced for large companies. It is important to note that public companies are not affected by the uncertainty of Russian economic policy, however, the European and global economic policy uncertainty has a negative impact on their investments. Testing the robustness by applying the methods of instrumental variables confirms the results. The study suggests that maintaining transparency and stability of economic policy can increase the level of corporate investment.

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Do Economic Policy Uncertainty and Geopolitical Risk Lead to Environmental Degradation? Evidence from Emerging Economies

Sustainability ◽

10.3390/su13115866 ◽

2021 ◽

Vol 13 (11) ◽

pp. 5866

Author(s):

Muhammad Khalid Anser ◽

Qasim Raza Syed ◽

Hooi Hooi Lean ◽

Andrew Adewale Alola ◽

Munir Ahmad

Keyword(s):

Economic Policy ◽

Renewable Energy ◽

Environmental Degradation ◽

Emerging Economies ◽

Ecological Footprint ◽

Policy Implications ◽

Policy Uncertainty ◽

Economic Policy Uncertainty ◽

Integration Test ◽

The Impact

Since the turn of twenty first century, economic policy uncertainty (EPU) and geopolitical risk (GPR) have escalated across the globe. These two factors have both economic and environmental impacts. However, there exists dearth of literature that expounds the impact of EPU and GPR on environmental degradation. This study, therefore, probes the impact of EPU and GPR on ecological footprint (proxy for environmental degradation) in selected emerging economies. Cross-sectional dependence test, slope heterogeneity test, Westerlund co-integration test, fully modified least ordinary least square estimator, dynamic OLS estimator, and augmented mean group estimator are employed to conduct the robust analyses. The findings reveal that EPU and non-renewable energy consumption escalate ecological footprint, whereas GPR and renewable energy plunge ecological footprint. In addition, findings from the causality test reveal both uni-directional and bi-directional causality between a few variables. Based on the findings, we deduce several policy implications to accomplish the sustainable development goals in emerging economies.

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