Economic policy uncertainty exposure and corporate innovation investment: Evidence from China

Cui, Xin; Wang, Chunfeng; Liao, Jing; Zhen-ming, Fang; Cheng, Feiyang

doi:10.1016/j.pacfin.2021.101533

Cited by 132 publications

(59 citation statements)

References 90 publications

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“…However, GEPU lags for India, but has a potential to lead or lag for Russia and China in the medium-term. Cui et al [ 103 ] observed that external uncertainty shocks has the potential to undermine corporate innovativeness in China as investments in innovation become stifled.…”

Section: Empirical Analysismentioning

confidence: 99%

Financial sector and economic growth amid external uncertainty shocks: Insights into emerging economies

et al. 2021

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The study aims to shed new lights on the lead-lag relationships between the financial sector (RFSI) and economic growth (GDP) in the midst of global economic policy uncertainty (GEPU) shocks for BRICS economies. Hence, the bivariate, partial, and wavelet multiple correlations techniques are employed. From the bivariate analysis, we document positive bi-directional causality between the RFSI and economic growth over the sample period. The partial wavelet reveals that GEPU shocks distort the significance and directional comovements between the RFSI and GDP. Moreover, the outcome from the wavelet multiple cross correlations (WMCC) indicates that the RFSI is a first mover at most time scales for the BRICS economies. This is followed by GEPU which either leads or lags for most scales, especially for South Africa. The impact of GEPU on RFSI and GDP is worst for South Africa in about four cases in the medium-, and long-terms. This signifies that South Africa’s financial markets and economic growth are vulnerable to GEPU. However, the impetus for GEPU to drive the comovements between the financial sector and economic activity was less pronounced in the pre-COVID analysis conducted with the WMCC. The study supports both the supply-leading and demand-following hypotheses. Our findings also underscore the need for policymakers, investors and academics alike to incessantly observe the dynamics between finance and growth across time and periodicity while considering adverse shocks from global economic policy uncertainty in tandem.

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Section: Empirical Analysismentioning

confidence: 99%

Financial sector and economic growth amid external uncertainty shocks: Insights into emerging economies

et al. 2021

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“…Because the increase in economic policy uncertainty makes the cost of capital for enterprises increase, which in turn reduces their innovation activities. Cui et al (2021), Guan et al (2021a), and Lou et al (2022) also confirm that economic policy uncertainty is significantly negatively related with corporate innovation. In short, the increase of economic policy uncertainty restrains the innovation behavior of enterprises.…”

Section: Theoretical Mechanism and Hypothesis Developmentmentioning

confidence: 69%

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

Xin

2022

Environ Sci Pollut Res

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We conduct theoretical and empirical study on the impact of economic policy uncertainty on PM2.5 pollution. Economic policy uncertainty has important impact on PM2.5 pollution through investment channel and innovation channel. Specifically, according to real option theory, increase in economic policy uncertainty can reduce investment, thereby reducing PM2.5 pollution. However, increase in economic policy uncertainty can hinder corporate’s innovation activities, which in turn make PM2.5 pollution increase. Therefore, the impact of economic policy uncertainty on PM2.5 pollution depends on the combination effect of these two different effects. Furthermore, using 25 countries’ unbalanced panel data and fixed effects estimation methods, we empirically test the impact of economic policy uncertainty on PM2.5 pollution. The results show that, with the increase of economic policy uncertainty, countries’ PM2.5 pollution has significantly decreased. In addition, economic policy uncertainty has heterogeneous effect on countries’ PM2.5 pollution. Compared with countries who have higher R&D input, increase in economic policy uncertainty makes the reduction of PM2.5 pollution in countries with relatively lower R&D input higher. By changing the measurement methods of economic policy uncertainty and PM2.5 pollution indicators, and using 2SLS methods to estimate the models, the conclusions of the paper are robust. Finally, we put forward corresponding policy implications.

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“…Furthermore, innovation can increase the operational risk of a firm while creating opportunities for firms to increase their investment in innovation for future growth options in terms of real options theory [9,43]. If the benefit that is produced by such risky innovation investment is greater than the option value produced by the delay and slowdown effect, enterprises will further increase Research and Development investment to improve their innovation ability and seize the future market under economic policy uncertainty [44,45]. Thus, economic policy uncertainty would be an engine for increases rather than decreases in regional innovation output.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effect of Innovative Entrepreneurial Vitality on Economic Resilience Based on a Spatial Perspective: Economic Policy Uncertainty as a Moderating Variable

Wang

Wulaer

et al. 2021

Sustainability

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This study measured the economic resilience of 269 prefecture-level cities in China by constructing an indicator evaluation system for the resilience, adjustment, and responsiveness of the economic system under external shocks. A dynamic spatial Durbin model and a moderating mediation model were employed to analyze empirically the impact of economic policy uncertainty and innovative entrepreneurial vitality on economic resilience using prefecture-level panel data from 2004 to 2018. The statistical results revealed that there were significant “snowball” effects and spatial spillover characteristics of economic resilience. Under the moderating effect of economic policy uncertainty, innovative entrepreneurial vitality was found to have a significant positive effect on economic resilience. Furthermore, innovative entrepreneurial vitality was found to enhance economic resilience significantly by upgrading the industrial structure, alleviating the income gap, and guiding economic agglomeration in the context of economic policy uncertainty. Moreover, the impacts of innovative entrepreneurial vitality and economic policy uncertainty on economic resilience, respectively, showed significant heterogeneities in terms of the cities’ regions and economic sizes. The above-mentioned results were found to be valid even after a series of robustness tests were carried out.

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Economic policy uncertainty exposure and corporate innovation investment: Evidence from China

Cited by 132 publications

References 90 publications

Financial sector and economic growth amid external uncertainty shocks: Insights into emerging economies

Financial sector and economic growth amid external uncertainty shocks: Insights into emerging economies

The impact of economic policy uncertainty on PM2.5 pollution—evidence from 25 countries

The Effect of Innovative Entrepreneurial Vitality on Economic Resilience Based on a Spatial Perspective: Economic Policy Uncertainty as a Moderating Variable

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