Climate Policy Fluctuations and Natural Resources: Policy Implications for the Green Economy

Presently, climate policy fluctuations (CPF) have been a subject of an everlasting debate in the US owing to the agenda of the Trump administration regarding climate change. Standing literature highlights the economic and environmental sides of CPF. However, the relationship between CPF and natural resources rent (NRR) has not yet been empirically evaluated. Hence, we aim to evaluate the dynamic impact of fluctuations in climate policies on NRR in the US in order to fill the aforesaid research gap. Furthermore, the structural shocks in the US economy impel us to employ the novel Fourier ARDL (FARDL) methodology. The results show that the CPF had a significant negative impact on NRR in both the long and short run. The sensitivity analysis further validates the findings, demonstrating that the CPF unfavorably affects NRR. This study’s major conclusions include managing fluctuations associated with climate policy to increase NRR.