How does climate policy uncertainty influence sustainable development? Unraveling role of recycling and natural resources in the United States

The impending climate policy has now become a threat to the United States (US) to maintain its economic growth. However, prevailing studies have extensively discovered economic uncertainty, with a scant emphasis on climate policy uncertainty (CPU). Therefore, policymakers emphasize the need to analyze the impact of CPU on economic dynamics. In this perspective, recycling (RCY) can mitigate adverse effects, and natural resources (NRR) are economic drivers in the US. Our study investigates the influence of CPU, RCY, and NRR on economic growth using annual data between 1990 and 2021. After confirming unit root and cointegration analysis, the study employs an autoregressive distributed lag (ARDL) model and rolling window approach for empirical evaluation. The long-run findings exhibit that CPU has a significant negative association and dampens economic growth by 0.046%. Contradictly, RCY and NRR promote economic growth by 0.518% and 0.026%, respectively. Likewise, consistent outcomes are estimated in the short run with different magnitudes, and the post-estimation affirms the consistency of the outcomes. Besides, the rolling window calculation indicates positive parameters for RCY and NRR and a negative coefficient for CPU. The study also estimated regression coefficients in the robustness analysis. The Granger causality estimation reveals one-way causality from NRR and RCY to economic growth, while unidirectional causality from economic growth to CPU. Overall, this study suggests that sustainable climate policies require recycling practices and efficient resource allocation to stimulate economic growth in the US.