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The Impact of Economic Policy Uncertainty on China’s Business and Consumer Confidence: A Quantile-Based Analysis

Author

Listed:
  • Assad Ullah

    (Hainan Normal University, School of Economics and Management)

  • İbrahim Özmen

    (Selcuk University, Department of Public Finance, Faculty of Economics and Administrative Science)

  • Azaz Ali Ather Bukhari

    (University of Narowal, Faculty of Business and Economics)

  • Amber Pervaiz

    (University of Education, Division of Management and Administrative Sciences)

  • Waqar Ali Ather Bukhari

    (Punjab Higher Education Department (HED), Government of Punjab)

  • Hina Shahzadi

    (University of Kassel, Department of Economics)

Abstract

In an era of economic volatility, consumer and business confidence are in the spotlight in shaping market outcomes. To this end, this study examines the impact of economic policy uncertainty (EPU) on business confidence (BC) and consumer confidence (CC) in China over a period spanning from 2000M1 to 2023M4. This study employs quantile-on-quantile regression and quantile causality approaches for empirical estimations. These approaches can illustrate the overall dependence structure among EPU, BC, and CC, enabling us to identify the underlying asymmetries. The empirical evidence underscores the negative association between EPU and BC in the low, medium, and high quantiles. Regarding the association between EPU and CC, the lower quantiles of EPU negatively influence the lower to medium quantiles of CC. In contrast, the lower quantiles of EPU have a positive association with the high quantiles of CC. In conclusion, the impact of EPU on BC is uniformly negative across the entire distribution, whereas the impact of EPU on CC exhibits asymmetry in China. The study recommends that policymakers should ensure transparent and proactive economic communication to propel business and consumer confidence in China.

Suggested Citation

  • Assad Ullah & İbrahim Özmen & Azaz Ali Ather Bukhari & Amber Pervaiz & Waqar Ali Ather Bukhari & Hina Shahzadi, 2025. "The Impact of Economic Policy Uncertainty on China’s Business and Consumer Confidence: A Quantile-Based Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(6), pages 17912-17939, December.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:6:d:10.1007_s13132-024-02486-8
    DOI: 10.1007/s13132-024-02486-8
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