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Macroeconomic uncertainty and firms’ investment in China

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  • Feng, Zhuozhao
  • Lin, Juan

Abstract

This paper constructs macroeconomic uncertainty indices for China from 2009 to 2021 based on the distribution of forecast errors of major macroeconomic variables. The indices effectively capture the economy’s deep slump and rebound in 2020. This study reveals a negative relationship between macroeconomic uncertainty and firms’ investment, with downside uncertainty having a larger negative impact than upside uncertainty.

Suggested Citation

  • Feng, Zhuozhao & Lin, Juan, 2023. "Macroeconomic uncertainty and firms’ investment in China," Economics Letters, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:ecolet:v:226:y:2023:i:c:s0165176523001209
    DOI: 10.1016/j.econlet.2023.111095
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Downside macroeconomic uncertainty; Upside macroeconomic uncertainty; COVID-19 outbreak; Firms’ investment;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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