Geopolitical risk, wartime economic policy uncertainty and carbon intensity
DOI:
https://doi.org/10.17811/ebl.15.3.2026.202-214Keywords:
Geopolitical uncertainty, Wartime Policy Uncertainty, Decarbonization, Quantile VEC, Climate policyAbstract
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
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References
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