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The impact of economic policy uncertainty on firms’ investment in innovation: Evidence from Chinese listed firms

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  • Wen Kun
  • Xiangxiang Hu
  • Fajiang Liu

Abstract

This paper uses data of Chinese listed enterprises and economic policy uncertainty index for empirical analysis, and conducts a study through three channels of monetary policy uncertainty affecting enterprise innovation investment, and finds that economic policy uncertainty has a positive promotion effect on enterprise R&D investment, and its increase in tension is instead a clear signal that can effectively increase enterprise R&D investment, this promotion effect seems unexpected, this paper Through theoretical analysis and combined with the actual practice, this incentive effect is found to be in line with reality. However, in the subsequent heterogeneity analysis, this paper finds that it positively promotes R&D investment when economic policy uncertainty is low and may have a suppressive effect on R&D investment when monetary policy uncertainty is high.

Suggested Citation

  • Wen Kun & Xiangxiang Hu & Fajiang Liu, 2022. "The impact of economic policy uncertainty on firms’ investment in innovation: Evidence from Chinese listed firms," PLOS ONE, Public Library of Science, vol. 17(11), pages 1-20, November.
    • Handle: RePEc:plo:pone00:0272983
    DOI: 10.1371/journal.pone.0272983
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    References listed on IDEAS

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