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Economic Policy Uncertainty and Carbon Emissions in Emerging Markets

Author

Listed:
  • Nuobu Renzhi

    (Capital University of Economics and Business, Beijing)

  • John Beirne

    (Asian Development Bank)

  • Le Ngoc Dang

    (Academy of Finance, Ha Noi)

Abstract

This paper empirically examines the impact of economic policy uncertainty (EPU) on carbon emissions in 13 emerging market economies (EMEs), using panel local projections over the period 1990 to 2023. The results indicate that rising EPU significantly increases carbon emissions. However, the impact varies across economic and institutional characteristics. Specifically, EMEs with lower initial carbon emissions, higher energy intensity, carbon pricing mechanisms, greater financial development, higher trade openness, stronger political stability, greater renewable energy reliance, and higher research and development intensity exhibit a weaker response to EPU. Moreover, high-income EMEs experience a muted response in emissions, whereas lowerincome EMEs face a more pronounced impact. Additionally, EMEs with low climate vulnerability see a stronger positive response in emissions compared to their high-vulnerability counterparts. These findings highlight the critical role of institutional and structural factors in shaping the emissions response to EPU, offering important policy insights for mitigating environmental risks in uncertain economic conditions.

Suggested Citation

  • Nuobu Renzhi & John Beirne & Le Ngoc Dang, 2026. "Economic Policy Uncertainty and Carbon Emissions in Emerging Markets," ADB Economics Working Paper Series 854, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:023057
    DOI: 10.22617/WPS260312-2
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    Keywords

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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