Environmental pollution constitutes a critical global issue with consequences extending beyond national borders due to its capacity to cause global warming and climate change. While increasing energy demand and industrialization exacerbate this problem, the impact of economic policy uncertainty on environmental sustainability remains insufficiently clarified in the literature. This study aims to fill an important gap in the literature and reveal the dynamics of this relationship by examining the impact of economic policy uncertainty on carbon emissions within a holistic framework, alongside energy consumption and economic growth.
In this study, data on fossil fuel consumption, gross domestic product, economic policy uncertainty and carbon emissions for the United States from 1990 to 2022 were used, and the short- and long-term relationships between the variables were analysed using the Autoregressive Distributed Lag bounds test approach. This method was chosen because it produces consistent results despite the variables having different integration levels.
Empirical findings indicate that economic growth and energy consumption increase carbon emissions in both the short and long term. One of the study's innovative findings is that economic policy uncertainty has an accelerating effect on environmental pollution in the United States in the long term. This result contributes significantly to the literature by demonstrating that policy uncertainty can negatively affect firms' investments in environmentally friendly technologies, long-term energy strategies and sustainability-focused decision-making processes. The findings highlight the need for policymakers to develop regulatory frameworks that reduce fossil fuel-based energy use, encourage renewable energy investments and reduce uncertainty.
This study analyses the impact of economic policy uncertainty, economic growth and fossil fuel energy consumption on environmental pollution under the restriction of the United States, which has a significant share in carbon emissions and has an important economy in the world.
These results support the need for policymakers to adopt innovative policy measures to shift from fossil fuel consumption-based energy use towards cleaner and renewable energy sources. Moreover, investing in low or zero carbon emission energy technologies is considered to be important to increase sustainable economic efficiency.
This study is one of the few investigations examining the impact of economic policy uncertainty in the United States on carbon emissions within a dynamic model framework, alongside energy consumption and economic growth variables. It fills a long-standing yet insufficiently addressed gap in the literature. Furthermore, the findings provide empirical evidence for current debates on the role of economic policy uncertainty in environmental sustainability, offering an innovative contribution to both environmental economics and energy policy. In relation to its contribution to the extant literature on the subject, the study proposes three significant innovations. Firstly, the integration of the economic policy uncertainty variable into environmental degradation analysis enables the assessment of the environment–economy interaction not only through economic growth or energy consumption but also through political instability and uncertainties in decision-making processes. Secondly, the study addresses theoretical lacunae that have been identified in the extant literature on energy and financial economics, elucidating the dynamic effects of policy uncertainty on environmental indicators. Thirdly, this analysis, conducted using the US example, provides empirical evidence of the interaction of economic and political factors in shaping global energy and environmental policies, thus providing policymakers with actionable insights.
