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Economic Policy Uncertainty and Innovation——Evidence from Listed Companies in China
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TitleEconomic Policy Uncertainty and Innovation——Evidence from Listed Companies in China  
AuthorGu Xiaming,Chen Yongmin and Pan Shiyuan  
OrganizationZhejiang University;University of Colorado 
Emailxiaminggu@zju.edu.cn;yongmin.chen@colorado.edu;shiyuanpan@zju.edu.cn 
Key WordsEconomic Policy Uncertainty; Innovation; R&D; Patent 
AbstractThis paper gives a mechanism on how economic policy uncertainty influences innovation. It puts forwards that economic policy uncertainty will have both incentive effect and selective effect on firm's innovative activities. Using the Economic Policy Uncertainty index of Baker, Bloom, and Davis (2016) and data of listed companies in China, we conduct empirical research on how innovative activities are affected by economic policy uncertainty. The empirical results indicate that economic policy uncertainty positively affects both R&D and patent application among the listed companies in China, contrary to its known negative impact on firm investment. Moreover, this relationship between policy uncertainty and innovations is influenced by factors such as government subsidy, financial constraint, ownership, and industry characteristics; it is consistent with the view in our mechanism that policy uncertainty can have selective and incentive effects on firm innovation. 
Serial NumberWP1313 
Time2018-12-12 
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