Testing the environmental Kuznets curve (EKC) hypothesis amidst climate policy uncertainty: sectoral analysis using the novel Fourier ARDL approach

In recent years, climate policy has experienced several episodes of crest and trough in the US, which has induced profound uncertainty. This climate policy uncertainty (CPU) may exert economic, social, and environmental impacts. Therefore, using the environmental Kuznets curve (EKC) framework, this study targets to probe whether CPU affects sectoral carbon dioxide emissions (COE) in the US. We make use of advanced econometric procedures such as the novel SOR unit root test (to probe the order of integration of the entire dataset) and the novel Fourier ARDL approach (to retrieve the long- and short-run estimates). The findings delineate that the EKC holds for the industrial, electric power, commercial, and residential sectors. In addition, CPU escalates COE in the residential, commercial, and electric power sectors in both the long- and short-run. Parallel to this, CPU affects industrial COE neither in the short-run nor in the long-run. Keeping in view the key findings, we propose a set of sector-specific policy implications to curb COE.