Steering through Uncertainty: How economic policy instability shapes smart transportation budgets

Economic policy uncertainty significantly impacts investment decisions, shaping technological advancements in critical sectors. Amid shifting economic landscapes, smart transportation technology is a key indicator of innovation and resilience. This research explores the asymmetric impact of economic policy uncertainty on smart transportation technology budgets in the top ten nations having the highest R&D funding in this field (China, the USA, Germany, Japan, Norway, the Netherlands, the UK, France, South Korea, and Sweden). The former studies used panel data tools and usually passed over nuanced national economic frameworks. This research adopts the sophisticated Quantile-on-Quantile technique, which estimates how various quantiles of the independent variable influence different quantiles of the dependent variable, thereby revealing asymmetric or nonlinear relationships. This method enables analysis of variables’ fluctuations in each economy, enhancing accuracy and deepening understanding of their unique features. Results reveal that economic policy uncertainty significantly curtails smart transportation technology budgets in most selected countries, each showing distinct patterns. These findings highlight the need for decision-makers to evaluate and formulate policies that manage economic policy uncertainty and smart transportation technology. Aligning these strategies with the Sustainable Development Goals will promote sustainable urban development, reduce emissions, and foster inclusive growth.