Natural resource development, economic policy uncertainty and urban residents’ consumption in China: a nonlinear ARDL and time-varying parameter vector autoregressive with stochastic volatility approach

Long T., Cui X., Yan J., IŞIK C., Pinzon S., Irfan M.

Stochastic Environmental Research and Risk Assessment, 2024 (SCI-Expanded) identifier

  • Publication Type: Article / Article
  • Publication Date: 2024
  • Doi Number: 10.1007/s00477-024-02698-z
  • Journal Name: Stochastic Environmental Research and Risk Assessment
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, Agricultural & Environmental Science Database, CAB Abstracts, Compendex, Environment Index, Geobase, Index Islamicus, Pollution Abstracts, zbMATH, Civil Engineering Abstracts
  • Keywords: Asymmetry, Economic policy uncertainty, Natural resource development, Non-linearity, Urban residents’ consumption
  • Anadolu University Affiliated: Yes


Increased risks of economic policy uncertainty and overexploitation of natural resources exist in China. At the same time, the growth rate of urban residents’ consumption has generally declined. The paper analyses the role of economic policy uncertainty (EPU) and natural resource exploitation on the urban residents’ consumption in China. Based on the data from the first quarter of 2002 to the third quarter of 2021, the paper uses a nonlinear autoregressive distributed lag model to verify the asymmetric effects. Then the paper constructs a time-varying parameter vector autoregressive model with stochastic volatility term to analyze the nonlinear responses. Impulse response analysis was used to further explain the relationship between the three. The negative impact of rising EPU on urban residents’ consumption is larger than its reduction. Negative shocks to natural resource development increase the urban residents’ consumption. Positive shocks reduce the urban residents’ consumption. There is a time-varying non-linear effect of EPU and natural resource development on urban residents’ consumption in China. The negative impact of EPU on urban consumption has been further exacerbated by major crises such as the financial crisis, COVID-19 and the post-crisis period. The negative impact of natural resource development diminished after the government introduced industrial upgrading policies and environmental regulations. This study provides constructive suggestions for the optimization of economic policies and the improvement of urban consumption. This study also enriches consumer theory and provides new evidence for the resource curse hypothesis.