This paper analyzes the impact of economic policy uncertainty on real estate development at the macro level in China. Using the Economic Policy Uncertainty (EPU) Index released by Baker et al. (2016), we find that EPU has a leading and negative effect on real estate development investment. And there is a positive relationship between EPU innovations and the growth rate of real estate development investment. Moreover, the restraining effect of EPU is more pronounced in the state-owned enterprisesí investment and the part of construction and installation investment. Based on the empirical evidences, we suggest that government should pay attention to the negative impact of economic policy uncertainty and maintain consistency and stability of economic policies.
JEL classification numbers: D81, R31, R38, G31
Keywords: Economic policy uncertainty, Real estate development, Real option theory
ISSN: 1792-6599 (Online)