Revisiting the resource curse through the lens of economic policy uncertainty

This study investigates whether economic policy uncertainty (EPU) conditions the relationship between natural resource rents and income inequality across 24 economies from 1996 to 2021. Although the resource curse hypothesis highlights the adverse economic and social consequences of resource dependence, limited empirical evidence examines how economic policy uncertainty shapes this relationship. Using the dynamic panel threshold regression approach of Seo and Shin (2016), the analysis identifies endogenous EPU thresholds at which the resource–inequality relationship shifts across regimes. The results reveal a clear threshold effect: under low uncertainty, resource rents significantly increase income inequality, consistent with the conventional resource curse hypothesis. Once EPU exceeds the estimated threshold, the net effect becomes statistically insignificant, suggesting that the resource-inequality nexus is regime-dependent rather than constant across policy environments. The disaggregated analysis further reveals substantial heterogeneity across resource categories. Oil and gas rents continue to amplify inequality under high uncertainty, whereas coal and forest rents are largely neutralized beyond their respective thresholds. Mineral rents display a reversal pattern, shifting from weakly equalizing under low uncertainty to inequality-increasing under elevated EPU. Control variables, including GDP per capita, institutional quality, and urbanization, also play important roles in shaping distributional outcomes. Overall, these findings highlight the importance of policy stability and the need for predictable institutional environments to ensure that resource wealth translates into inclusive development. The findings carry direct implications for SDG 10 (Reduced Inequalities) and SDG 16 (Peace, Justice and Strong Institutions), highlighting that policy stability and effective governance are essential for resource wealth to contribute to equitable and sustainable development.