Assessing the Impact of Geopolitical Risk on Environmental Degradation in G7 Countries: A Quantile-on-Quantile Regression Approach
Journal Title: Journal of Green Economy and Low-Carbon Development - Year 2023, Vol 2, Issue 4
Abstract
Considering the recent adverse developments, studies have focused on the environmental degradation of countries. In this context, various indicators for the environment as well as explanatory variables have been used. In line with the increasing geopolitical risk (GPR) in recent times, the study focuses on investigating the impact of GPR on the environment for G7 countries, which are the leading economies in the world. In doing so, the study considers carbon dioxide (CO2) emissions and ecological footprint (EF) as the environmental indicators; and performs quantile-on-quantile regression (QQ) as the fundamental model, which investigates the relationship between two variables across quantiles (i.e., levels); applies quantile regression (QR) for robustness; and uses using monthly data between 1985 and 2022. The study proves that (i) GPR generally decreases CO2 emissions at higher quantiles, whereas it causes an increasing impact at lower quantiles; (ii) GPR mainly curbs EF at higher levels, whereas it causes a stimulating impact at lower levels; (iii) the power of the impact of GPR differentiates a bit according to quantiles, indicators, and countries; (iv) the alternative method mostly validates the robustness of the results. Thus, the study implies that GPR has a stimulating impact on environmental degradation at the beginning (i.e., lower quantiles) by causing much more consumption and short-term-based decisions, whereas it causes a decline at the last (i.e., higher quantiles) through making consumption more responsible and decisions with more long-term-based perspective. So, GPR is an important predictor of the environment and has a critical impact on environmental degradation. Accordingly, policymakers have to consider the quantile, country, and environmental indicator-based differentiation impact of GPR on the environment in designing environmental policies. In this way, it is possible for the countries to achieve sustainable development goals by ensuring environmental degradation.
Authors and Affiliations
Mustafa Tevfik Kartal, Ugur Korkut Pata
Keywords
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- EP ID EP731985
- DOI https://doi.org/10.56578/jgelcd020402
- Views 64
- Downloads 0
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