The Impact of Economic Policy Uncertainty on Regional Total-Factor Energy Productivity in China

Bin Wang, Chenyang Meng () and Hongwei Yu ()
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Bin Wang: School of Economics, Wuhan Textile University, Wuhan 430200, China
Chenyang Meng: School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China
Hongwei Yu: Institute of Quality Development Strategy, Wuhan University, Wuhan 430072, China

IJERPH, 2023, vol. 20, issue 4, 1-20

Abstract: This paper investigates the effect and possible mechanism of implicit macroeconomic policy uncertainty on regional energy productivity in China. This study takes the unexpected output of environmental pollution from energy consumption into account and uses the DEA-SBM method to measure the regional total-factor energy productivity (RTFEP) of prefecture cities in China from 2003 to 2017. Based on the economic policy uncertainty (EPU) index constructed by Baker et al. this paper estimates the effects of EPU on RTFEP and finds that there is a significant negative relationship between them. Specifically, for every unit increase in EPU, RTFEP will decrease by 5.7%. This paper further examines the mechanism of EPU on RTFEP from the perspective of the market and the government and finds that EPU exerts a restraining effect on RTFEP by affecting the consumption structure of the energy market and government intervention in the economy. In addition, the results show that there is heterogeneity in the impact of EPU on RTFEP which varies between resource-based cities at different development stages and different dominant resources. Finally, this paper proposes to cope with the negative impact of EPU on RTFEP by optimizing the energy consumption structure, regulating government investment areas, and transforming the economic development mode.

Keywords: economic policy uncertainty; total-factor energy productivity; energy market; government intervention (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2023
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