IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/342380.html

Geopolitical risk, wartime economic policy uncertainty, and carbon intensity

Author

Listed:
  • Sarker, Provash Kumer

Abstract

We examine how geopolitical risk and wartime economic policy uncertainty affect carbon intensity (CI) in the United States. Using monthly data from 2000 to 2024 and employing a Quantile Vector Error Correction Model (QVECM) with the Caldara-Iacoviello Geopolitical Risk Index (GPR) and Brochet et al.’s adjusted Economic Policy Uncertainty index (AEPU), we uncover pronounced asymmetries across carbon intensity distributions. Error correction speeds exhibit a U-shaped pattern, with the strongest adjustments at extreme quantiles (24.5% at the 95th percentile) and the weakest around the median. Geopolitical risk increases carbon intensity during high-emission periods while policy uncertainty reduces it at both extremes. These findings highlight the need for distribution-sensitive climate policies during geopolitical crises

Suggested Citation

  • Sarker, Provash Kumer, 2026. "Geopolitical risk, wartime economic policy uncertainty, and carbon intensity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 15(3), pages 202-214.
    • Handle: RePEc:zbw:espost:342380
    DOI: 10.17811/ebl.15.3.2026.202-214
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/342380/1/Sarker-Geopolitical-risk.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17811/ebl.15.3.2026.202-214?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
    2. Provash Kumer Sarker & Xihui Haviour Chen, 2025. "Quantile Effects of Climate Policy Uncertainty, Economic Policy Uncertainty, and Interest Rates on REIT Returns: Evidence From the United States," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 54(2), July.
    3. McWilliams, Ben & Sgaravatti, Giovanni & Tagliapietra, Simone & Zachmann, Georg, 2023. "How would the European Union fare without Russian energy?," Energy Policy, Elsevier, vol. 174(C).
    4. Brochet, Sophie & Mueller, Hannes & Rauh, Christopher, 2025. "Uncovering Economic Policy Uncertainty During Conflict," CEPR Discussion Papers 20560, Centre for Economic Policy Research.
    5. Bose, Sudipta & Shams, Syed & Ali, Searat & Al Mamun, Abdullah & Chang, Millicent, 2024. "Economic policy uncertainty, carbon emissions and firm valuation: International evidence," The British Accounting Review, Elsevier, vol. 56(6).
    6. Paramati, Sudharshan Reddy & Safiullah, Md & Soytas, Ugur, 2025. "Does geopolitical risk increase carbon emissions and public health risk?," Energy Economics, Elsevier, vol. 143(C).
    7. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    8. repec:cam:camjip:2520 is not listed on IDEAS
    9. Adams, Samuel & Adedoyin, Festus & Olaniran, Eniola & Bekun, Festus Victor, 2020. "Energy consumption, economic policy uncertainty and carbon emissions; causality evidence from resource rich economies," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 179-190.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hoang, Dung Phuong & Chu, Lan Khanh & To, Trung Thanh, 2023. "How do economic policy uncertainty, geopolitical risk, and natural resources rents affect economic complexity? Evidence from advanced and emerging market economies," Resources Policy, Elsevier, vol. 85(PA).
    2. Li, Zepei & Huang, Haizhen, 2023. "Challenges for volatility forecasts of US fossil energy spot markets during the COVID-19 crisis," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 31-45.
    3. Banerjee, Pradip & Bose, Sudipta & Dhole, Sandip & Truong, Cameron, 2025. "Greening up their act: Corporate carbon emissions reduction in response to political risk," Energy Economics, Elsevier, vol. 150(C).
    4. Khatib Ahmad Khan & Phan The Cong & Ali Abbas & Paiman Ahmad & Nguyen Ngoc Quynh & Minh‐Quang Nguyen & Ahsan Anwar, 2025. "Navigating the environmental impact of geopolitical risk and economic policy uncertainty: Evidence from load capacity curve hypothesis in BRICST economies," Natural Resources Forum, Blackwell Publishing, vol. 49(4), pages 3511-3530, November.
    5. Zribi, Wissal & Boufateh, Talel & Lahouel, Bechir Ben & Urom, Christian, 2024. "Uncertainty shocks, investor sentiment and environmental performance: Novel evidence from a PVAR approach," International Review of Financial Analysis, Elsevier, vol. 93(C).
    6. Ye, Shiqi & Zhang, Hongyin & Zhou, Mo & Zheng, Tingguo, 2025. "Assessing energy sector resilience to adverse shocks: A scenario-based QVAR approach," Energy Economics, Elsevier, vol. 149(C).
    7. Muhammad Khalid Anser & Qasim Raza Syed & Hooi Hooi Lean & Andrew Adewale Alola & Munir Ahmad, 2021. "Do Economic Policy Uncertainty and Geopolitical Risk Lead to Environmental Degradation? Evidence from Emerging Economies," Sustainability, MDPI, vol. 13(11), pages 1-15, May.
    8. Ibrahim Cutcu & Ali Altiner & Eda Bozkurt, 2025. "The Impact of Economic Policy Uncertainty and Geopolitical Risk on Environmental Quality: An Analysis of the Environmental Kuznets Curve Hypothesis with the Novel QRPD Approach," Sustainability, MDPI, vol. 17(1), pages 1-24, January.
    9. Zhang, Jiahao & Zhang, Yifeng & Wei, Yu & Wang, Zhuo, 2024. "Normal and extreme impact and connectedness between fossil energy futures markets and uncertainties: Does El Niño-Southern Oscillation matter?," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 188-215.
    10. Veli Yilanci & Faruk Mike & Uğur Ursavaş & Oktay Kızılkaya, 2026. "Economic and geopolitical risk factors on environmental sustainability in Türkiye: a time-varying and wavelet coherence analysis," Quality & Quantity: International Journal of Methodology, Springer, vol. 60(2), pages 4225-4245, April.
    11. Zhang, Ying & Liu, Baoliu & Xue, Jinjun & Chen, Yiming & Zhao, Fang, 2025. "Would geopolitical risks be the new driver of the energy transition? An empirical study on renewable energy technology innovation," Energy Economics, Elsevier, vol. 141(C).
    12. İhsan Erdem Kayral & Melike Aktaş Bozkurt & Tuğba Sarı & Nisa Şansel Tandoğan Aktepe, 2026. "Forecasting Global CO2 Emissions Under Economic, Geopolitical, and Policy Uncertainties: A Novel Hybrid Model," Computational Economics, Springer;Society for Computational Economics, vol. 68(1), pages 257-305, July.
    13. Rongrong Li & Qiang Wang & Xueting Li, 2025. "Geopolitical risks and carbon emissions: the mediating effect of industrial structure upgrading," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-15, December.
    14. Dao, Ngoc Bich & Truong, Huong Hoang Diep & Shahbaz, Muhammad & Chu, Lan Khanh, 2024. "The impacts of natural resources rents diversification, uncertainty, and environmental technologies on ecological sustainability: Empirical evidence from OECD countries," Resources Policy, Elsevier, vol. 91(C).
    15. Diakonova, Marina & Molina, Luis & Mueller, Hannes & Pérez, Javier J. & Rauh, Christopher, 2024. "The information content of conflict, social unrest and policy uncertainty measures for macroeconomic forecasting," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(4).
    16. Ca' Zorzi, Michele & Manu, Ana-Simona & Lopardo, Gianluigi, 2025. "Verba volant, transcripta manent: what corporate earnings calls reveal about the AI stock rally," Working Paper Series 3093, European Central Bank.
    17. Alessandro Paolo Rigamonti & Giulio Greco & Mariarita Pierotti & Alessandro Capocchi, 2024. "Macroeconomic uncertainty and earnings management: evidence from commodity firms," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1615-1649, May.
    18. Zhibing Li & Jia Liu & Jie Liu & Xiaoyu Liu & Yinglun Zhu, 2024. "The causal effect of political risk on the stock market: Evidence from a natural experiment," Australian Economic Papers, Wiley Blackwell, vol. 63(1), pages 145-162, March.
    19. Cakici, Nusret & Zaremba, Adam, 2022. "Salience theory and the cross-section of stock returns: International and further evidence," Journal of Financial Economics, Elsevier, vol. 146(2), pages 689-725.
    20. Philip Barrett & Mariia Bondar & Sophia Chen & Mali Chivakul & Deniz Igan, 2024. "Pricing protest: the response of financial markets to social unrest," Review of Finance, European Finance Association, vol. 28(4), pages 1419-1450.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:342380. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.