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International Fund Allocation under Economic Policy Uncertainty Shock

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  • Jingya Hou
  • Daoguo Wang

Abstract

This paper focuses on the impact of economic policy uncertainty on international asset allocation and international capital flows. Our results show that economic policy uncertainty shocks have a negative impact on the international asset allocation, which can be explained from the real economic activity channel and the expectation channel. We also explore a full fledge of country level heterogeneities about the economic policy uncertainty shocks on international asset allocation. Specifically, good institutional quality, transparent information, good information access to the international financial market and bilateral informational link help to alleviate the negative effect that economic policy uncertainty shock does to asset allocation. And a healthy public and external sector also help to alleviate the negative effect. While the importance of government in the economy amplifies the negative effect of economic policy uncertainty shocks to asset allocation. Â JEL classification numbers: E44, G11, G15.

Suggested Citation

  • Jingya Hou & Daoguo Wang, 2022. "International Fund Allocation under Economic Policy Uncertainty Shock," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 12(5), pages 1-5.
    • Handle: RePEc:spt:apfiba:v:12:y:2022:i:5:f:12_5_5
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic policy uncertainty; Global fund allocation; Institutional quality; Global imbalance.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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