Asymmetric trade uncertainty-environmental quality nexus: evidence from quantile estimation

Trade uncertainty leads to fluctuations in global trade dynamics and their potential impacts on environmental conditions, prompting concerns about how trade policies and practices may influence environmental sustainability and pollution levels. The present investigation desires to probe the correlation between trade uncertainty and environmental quality in the top 10 economies known for high levels of trade uncertainty (the USA, China, the UK, Japan, South Korea, Italy, Germany, France, Spain, and Australia). Previous studies have consistently explored this relationship using panel data analysis, which uncovered distinct and separate correlations in specific countries. The existing work applies a distinctive tool, ‘Quantile-on-Quantile’, to analyze the interdependence of time series data within all nations. The outcomes of this research disclose that trade uncertainty predominantly has a positive impact on environmental quality in most nations, particularly within particular segments of the distribution of data. Furthermore, this research highlights the diverse levels of asymmetries in the correlation between these variables across distinct countries. In addition, the outcomes demonstrate that the extent of asymmetry between the variables varies from one economy to another, underscoring the importance for policymakers to exercise careful emphasis when executing trade-related uncertainty and environmental sustainability policies.