The impact of fiscal decentralization, green energy, and economic policy uncertainty on sustainable environment: a new perspective from ecological footprint in five OECD countries

Abstract

The paper explores the short-run and long-run asymmetric impact of fiscal decentralization, green energy, and economic policy uncertainty on environmental sustainability proxied by ecological footprint. Using the Nonlinear Autoregressive Distributed lag (NARDL) approach in selected five OECD countries, we find that ecological footprint responds to positive and negative fiscal decentralization asymmetrically in the long run and short run. However, the nature of the response varies significantly across countries. The result also suggests that green energy is a major factor in reducing the ecological footprint in all countries except Canada. Finally, economic policy uncertainty plays a negative and significant role in the ecological footprint in the UK, USA, and Germany while insignificant in Australia and Canada. Implications for effective environmental policies are discussed.

Keywords: Asymmetric; Economic policy uncertainty; Environmental sustainability; Fiscal decentralization; Green energy; OECD.