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The economic policy uncertainty and firm investment in Australia

Author

Listed:
  • Ji Wu
  • Jing Zhang
  • Shiyu Zhang
  • Liping Zou

Abstract

This paper examines the impact of economic policy uncertainty (EPU) on the Australian firm investment activity. We find a significant positive relationship between the EPU and the firm investment over 2002 to 2017 period. Our main results remain unchanged after several endogeneity tests. Further analysis reveals that this relationship becomes pronounced for firms if their headquarters located in small states, firms with more tangible assets, higher operating cash flows and cash holdings, higher profits and leverage, but firms with fewer dividend payouts. Our paper sheds lights on the unique attribute of the impact of the EPU on the Australian firm investment activity and offers important policy and managerial implications.

Suggested Citation

  • Ji Wu & Jing Zhang & Shiyu Zhang & Liping Zou, 2020. "The economic policy uncertainty and firm investment in Australia," Applied Economics, Taylor & Francis Journals, vol. 52(31), pages 3354-3378, June.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:31:p:3354-3378
    DOI: 10.1080/00036846.2019.1710454
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