Economic policy uncertainty and household consumption: Evidence from Chinese households

Weixing Wu and Jing Zhao

Journal of Asian Economics, 2022, vol. 79, issue C

Abstract: We find that households reduce their consumption in response to higher economic policy uncertainty (EPU). Compared with lower income households, high income group is more severely affected which can be explained by the portfolio choice of illiquid asset and liquid asset. In addition, the uncertainty effect is more pronounced among older, wealthier, well-educated and urban households. The impact of EPU on household consumption is also persistent. Holding more liquid asset and commercial insurance represent important channels in mitigating the negative effect of EPU on household consumption.

Keywords: Household consumption; Economic policy uncertainty; Portfolio choice (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:79:y:2022:i:c:s1049007821001640

DOI: 10.1016/j.asieco.2021.101436

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