The Impact Of Economic Policy Uncertainty On Enterprise Innovation

In the past ten years,in response to various complicated political and economic situations at home and abroad and to ease the pressure of economic downturn,the Chinese government has continuously adjusted the existing economic policies,making economic policies face greater uncertainty.On the other hand,China's economy has entered the "new normal",economic development is no longer blindly pursuing speed and more to pursue quality and efficiency,innovation has become an important source of China's economic development.In this context,this paper attempts to explore the impact and mechanism of economic policy uncertainty on corporate innovation.This paper uses the China Economic Policy Uncertainty Index constructed by Baker et al.(2016)and the relevant data of listed companies from 2007 to 2015 to empirically analyze the impact of economic policy uncertainty on corporate innovation activities.Based on the empirical analysis of enterprise R&D investment and various patent applications,the paper shows that the uncertainty of economic policy has promoted enterprise innovation.Further heterogeneity analysis shows that the promotion of uncertainties in economic policies is related to the financing constraints of enterprises,the nature of ownership of enterprises,and the factors of concentration of ownership of enterprises.At the same time,this paper also finds that in the late stage of interest rate marketization,the uncertainty of economic policy has a greater impact on corporate innovation activities.The conclusions of this paper indicate that when the government frequently adjusts existing economic policies,it must comprehensively consider its impact on different economic activities;the government should focus on building a good external environment,such as developing a sound financial market to reduce financing costs to encourage enterprises to carry out innovation activities;the government should continue to deepen state-owned enterprise reform,encourage the privatization of state-owned enterprises in some fields,and at the same time formulate corresponding measures to encourage state-owned enterprises to get rid of policy dependence and strengthen innovation;the government should encourage high-quality enterprise equity acquisitions to ease the issue of entrusting agents of shareholders and management to promote enterprise innovation;the government should continue to deepen interest rate marketization reforms,reduce interest rate controls,improve the efficiency of social financing,and increase the scale of innovation investment.