The Impact Of Economic Policy Uncertainty On Macroeconomic In China

There are many factors that lead to macroeconomic fluctuations,ranging from aggregate demand level factors such as consumption and investment to aggregate supply level factors such as technological progress.However,the economic policy uncertainty may affect consumption,investment as well as technological progress,which in turn affect economic fluctuations and growth.Concerns about economic policy uncertainty have risen after global financial crisis,the FRB and IMF suggest that the economic policy uncertainty hindered the recovery of the U.S as well as the world economy.The economic policy uncertainty is unusually high in recent years in China.The possible reasons are: on the one hand,China's economy has experienced rapid growth for more than 30 years,but the growth that relied on lower cost and large-scale investment is unsustainable,the economy is in the process of transforming development mode,optimizing the economic structure,transforming the growth momentum,but facing many difficulties such as overcapacity,insufficient endogenous growth power and accumulation of systemic risks;on the other hand,the world economy is in a period of deep adjustment,reverse globalization trends,trade protectionism tendencies,and geopolitical risks are increasing uncertainties in the external environment,especially from the Trump administration's trade protection policy.It poses a greater threat to China's economic development.Under the pressure of the slowdown of domestic economic growth and the increasing uncertainty of foreign country,the future economic growth in China is full of uncertainty.Therefore,it is important to study the impact of China's policy uncertainty on the macro economy and its mechanism.Based on the previous research results,this paper analyzes and examines the influence of policy uncertainty on the macroeconomic and its mechanism through TVP-VAR,TVAR model,GVAR model and spatial econometric model.In addition,considering the importance of the real estate market in China's economy and the important role of technological innovation in driving China's economic growth,this paper further studies the impact of policy uncertainty on housing price fluctuations and technological innovation.The conclusion is as follow: Firstly,economic policy uncertainty is an important factor that affects the macro economy,which inhibits the investment and consumption of economic entities,which negatively affects output growth,but the impact on innovation is time-varying;expectations and credit are policy uncertainties Is an important channel that affects the macro economy,but the mechanism of asset prices is not very clear.Secondly,the impact of economic policy uncertainty on macroeconomics is asymmetric.When economic policy uncertainty is high,one positive impact of standard deviation caused a decline of output in 0.21%,house prices and stock market volatility,the influence lasts for half a year,and the spillover between variables was stronger.But,when economic policy uncertainty is low,the impacts were much more weaker.Thirdly,the impact of economic policy uncertainty on macroeconomics and asset prices is heterogeneous.Economic policy uncertainty has a greater negative impact on output and investment in the eastern and central regions,and has a stronger negative impact on housing prices in the central and western regions.A standard positive deviation of economic policy uncertainty caused the output of eastern and central regions rapidly decline about 0.05%,and the investment reduce about 0.2% to 0.3%,which caused the sharp fluctuations of the housing price in the central and western regions,while the housing price in the northeast showed a downward trend.Finally,economic policy uncertainty significantly reduces the level of technological innovation,both in terms of quality and quantity.The economic policy uncertainty has a greater negative impact on the technological innovation of the eastern developed regions,and the negative impact on patent quality is higher than the number of patents.The economic policy uncertainty rise one point,which will reduce the number of patents about 0.05% and invention patents about 0.09%in eastern.But the improvement of institutional environment,like marketization,financial market as well as intellectual property protection have a have a strong positive promoting effect on innovation.Based on the above conclusions,this paper proposes the following suggestions:Firstly,when formulating or adjusting policies,the government should pay attention to the negative impact of uncertainties on the macroeconomic caused by frequent policy changes.In order to minimize the adverse effects of economic policy uncertainty,relevant departments should guide the public form reasonable expectations,maintain the financial market stable and avoid large fluctuations in asset prices.Secondly,when facing economic recession or emergencies,like natural disasters or large-scale epidemic disease outbreaks,it is necessary for the government to intervene reasonably and appropriately in the economy,but excessive frequent intervention is undesirable to economic stability and growth.In order to maintain the credibility of the government,the government should strengthen the forward-looking policy,maintain the coordination and consistency of the policy,and avoid policy changes frequently.Thirdly,it is necessary to implement policies according to local conditions.The uncertainty of economic policies affects different regions of China differently,and the negative impacts of the eastern region are stronger.Therefore,the eastern region should pay more attention to the uncertainty of economic policies.Finally,the government should strive to improve the institutional environment and create a good business environment for market players,for example,reduce market intervention,improve the level of financial market development,and strengthen intellectual property protection in order to encourage technological innovation...