Research on the Impact of Economic Policy Uncertainty on Macro-economy from the Perspective of Sustainable Development

Abstract

 The reason of economic fluctuation has always been the most important topic in macro-economy research. In traditional economic theory, there are many reasons for economic fluctuation, both monetary factors and real economic factors will cause economic fluctuation. This paper takes the uncertainty of economic policy as the object of investigation, based on the perspective of sustainable development, and empirically tests the specific impact of economic policy uncertainty on macro-economy in a complete economic cycle through TVP-VAR model. Investment, consumption and R&D are included as endogenous variables. This paper empirically tests the impact of economic policy uncertainty on macro-economy variables such as investment, consumption, economic output and inflation rate in a complete economic cycle. The results show that the uncertainty of economic policy has a negative impact on investment and consumption. The negative impact of economic policy uncertainty in the fourth phase is the strongest, and the short-term negative impact will continue to deepen after 2019 until 2021, and the impact of the first phase will remain at around -0.15%. The variable that has the greatest influence on output fluctuation is economic uncertainty, which accounts for 84.15% of the fluctuation. Secondly, technological progress contributes 79.88% to output fluctuation, and economic uncertainty has a negative impact on output. The impact of economic uncertainty on output fluctuation is stronger than that on consumption, capital and employment.