Dynamic impacts of equity market volatility, energy prices, and carbon emissions on U.S. economic growth: a novel quantile and wavelet approach

Understanding the interplay between financial markets, energy dynamics, and environmental factors is crucial for fostering sustainable economic growth. This study examines the dynamic interactions between equity market volatility, energy prices, carbon emissions, and economic growth in the United States. Using ad vanced econometric techniques such as Quantile Regression, Quantile-on-Quantile Regression and Wavelet Coherence Analysis, the research captures the heteroge neous effects of these variables across different economic conditions. The findings reveal that equity market volatility has a nonlinear impact on economic growth, with its effects varying across growth quantiles. While energy prices and carbon emissions positively influence economic growth at lower levels, their impact dimin ishes or turns negative at higher levels, highlighting threshold effects. Additionally, wavelet coherence analysis identifies time-varying relationships, particularly during economic crises. These results offer critical policy insights, emphasizing the need for balanced financial regulations, sustainable energy strategies, and environmental policies that support economic resilience while mitigating carbon emissions. This study contributes to the literature by integrating financial market dynamics with energy and environmental considerations, providing a comprehensive framework for economic sustainability.