The effect of energy consumption on the environment in the OECD countries: economic policy uncertainty perspectives

Zakari, Abdulrasheed; Adedoyin, Festus Fatai; Bekun, Festus Victor

In this paper, we investigate the impact of energy use and economic policy uncertainties on the environment. To achieve this objective, we use the pooled mean group-autoregressive distributed lag methodology (PMG-ARDL) and Dumitrescu and Hurlin causality test on 22 Organisation for Economic Co-operation and Development (OECD) countries between 1985 and 2017. The PMG-ARDL estimation shows that energy use and economic policy uncertainties have a positive relationship with carbon dioxide emission (CO(2)) emission, while a negative relationship is confirmed between renewable and CO(2) emissions in the long run. The short-run estimation shows a positive relationship between energy use, real gross domestic product, and per capita on CO(2) emissions. The Dumitrescu and Hurlin causality results highlight a unidirectional running from real GDP and GDP per capita square to CO(2) emissions. Furthermore, one-way causality exists between CO(2) emissions to economic policy uncertainties. These results have policy implications on the macroeconomy which are discussed in detail in the concluding section.