Does Climate Policy Uncertainty Matter for Macroeconomic Conditions? Evidence from China

This study aims to investigate the macroeconomic effects of China’s climate policy uncertainty (CCPU) shock. To this end, we construct a novel CCPU index, which is found to coincide with key domestic climate policy changes. By using the time-varying VAR method, we show that CCPU has a significant negative impact on the total investment (TIV), the industrial production index (IPI), and the purchasing managers’ index (PMI) in the medium and long term. Our outcomes also suggest that PMI is more negatively affected than others during periods of high policy uncertainty