Asymmetric Effects of Inflation Instability and GDP Growth Volatility on Environmental Quality in the USA

Abstract

Historically, the USA economy has faced many ups and downs regarding the stability of GDP, growth rate, and exchange rate. We evaluated and analyzed the symmetric and asymmetric effects of macroeconomic volatility on environmental quality in the United States from 1970 to 2019. ARDL and NARDL are used to achieve this goal. By using the secondary data, the findings revealed that inflation uncertainty and GDP volatility have both short- and long-term effects on pollution emissions. When the effect of GDP volatility is captured, the negative shocks of GDP volatility and inflation instability have a positive and significant impact on environmental quality, however when the effect of GDP volatility is captured, severe outcomes are reached. The study also indicate that there were some negligible inflation instability and GDP growth rate volatility coefficients.