Abstract:
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
