Economic Policy Uncertainty And Short-time Cross-border Capital Flows In China

This paper mainly studies the time-varying impact of economic policy uncertainty on cross-border capital flows in China.In the context of severe fluctuations in the international environment and the increasing importance of cross-border capital flow,cross-border capital inflow can alleviate the problem of capital shortage,which is beneficial to the development of a country’s economy.On the other hand,the characteristics of short-term cross-border capital flow,such as fast speed,strong reversal,strong sensitivity,are easy to cause the instability of a country’s economy.In recent years,the international economy has suffered repeated shocks.Especially since2008,the global financial crisis,the European sovereign debt crisis,the sino-us trade friction,COVID-19 outbreak occurred one after another,such as causing instability in global economic and financial environment,countries have introduced a macroeconomic policy response to the crisis,the uncertainty of economic policies also increased,and influence the cross-border capital flows.Based on the existing research,this paper studies the impact of economic policy uncertainty on short-term cross-border capital flows in China.At the same time,by means of comparative analysis,this paper analyzes the effects of domestic and external economic policy uncertainties and other important influencing factors on short-term cross-border capital in China.This paper selects monthly economic data from 2000 to 2020 and uses TVP-VAR model to analyze the impact of global and Chinese economic policy uncertainties on short-term cross-border capital flows in China.The empirical results show that both global and Chinese economic policy uncertainties have a significant impact on China’s cross-border capital flows.However,the impact directions of the two uncertainties are completely opposite.Domestic economic policy uncertainty has a significant negative impact on the net cross-border capital flows,while global economic policy uncertainty has a positive impact.Therefore,in addition to continuing to promote the internationalization of China’s economy and finance,China’s regulatory authorities should also include the uncertainty of economic policy into the indicators of supervision and policy making,so as to manage China’s cross-border capital flows more effectively.