The Impact of Economic Policy Uncertainty on Energy Prices, Financial Stability and Consumptionbase Carbon Emissions

This thesis investigates the impact of Economic policy uncertainty on energy prices, financial stability and consumption-based carbon emissions. The second chapter of this thesis employed multivariate DCC-GARCH models to examine the interconnection between natural gas price, crude oil prices and Russian economic policy uncertainty (REPU) for the period of 1994-2019. The findings indicate strong interconnections natural gas prices, crude oil price and REPU. The findings further revealed that the interconnection between REPU and natural gas is more than that of between REPU and crude oil price. Moreover, the correlation between REPU and natural gas prices is higher, followed by the correlation between REPU and crude oil price. Energy prices follows similar pattern, they both increase and decrease at the same period. The findings further indicates that crucial global events like 2008 global crisis, 9/11 terrorist attack and 2014-2017 Russian financial crisis has significant impact on the interconnections between REPU and energy prices. The thesis further utilized the Mean Group (MG) estimators, the Augmented Mean Group (AMG) estimators, and the Common Correlated Effects Mean Group (CCFMG) estimators to investigate the influence of United State economic policy uncertainty (US EPU) on BRICS financial stability for the period of 2003-2020. The findings of the chapter revealed that US EPU is insignificant to BRICS financial stability, the findings further indicates that and increase in trade openness, gross domestic product per capita and gross capital formation increases financial stability. Conversely, increase in exchange rate, inflation rate and domestic credit to private sector decreases financial stability. Moreover, the thesis applied Panel Autoregressive Distributive Lag (ARDL) Model to investigate the impact of Economic Policy Uncertainty (EPU) and Foreign Direct Investment (FDI) on Consumption-based Carbon Emissions (CCO2 emissions) a case study of G7 countries for the period of 1994-2020. The findings shows that an increase in EPU decreases CCO2 emissions, while increase in FDI improves CCO2 emissions. Furthermore, Domestic investment (DI) and Gross Domestic Product per Capita (GDP) enhances CCO2 emissions, while Portfolio Investment (PI) negatively impact CCO2 emissions.