Research on the Impact of External Economic Policy Uncertainty on China's Financial Market and Risk Contagion

Abstract

In the context of external economic policy uncertainty, using China's macroeconomic data from August 2014 to August 2021, using the MS-VAR model to analyze how external uncertainties impact the systemic risks of China's financial market through short-term capital flow channels Accumulation and diffusion have an impact. The results show that rising global economic policy uncertainty will trigger a procyclical effect between RMB appreciation expectations and short-term capital flows, and ultimately lead to an increase in the linkage between domestic stock prices and real estate price fluctuations, indicating that global economic policy uncertainty is triggered an important external cause of systemic financial risks in the domestic financial market. Therefore, regulators must pay close attention to the impact of global economic policy uncertainties on short-term capital flows, positively guide RMB exchange rate expectations, and minimize the effect of external shocks on the accumulation of domestic systemic financial risks.