Innovation dynamics -what are the housing market uncertainty's impacts

摘要

Uncertainty matters great for firms' investment decisions and behaviors, and thus impacts economy growth. This paper uses the housing market uncertainty to measure economic uncertainty and explores how housing market uncertainty impacts on firms' innovation activities. This paper shows the uncertainty has a positive impact on firms' innovation performance, including R&D investment, innovation level and other innovation outcomes. Firms' innovation performance is significantly driven by the uncertainty through the crowding-out effect of housing investment. Moreover, firms in higher competitive industries are more likely to invest in innovation due to the uncertainty shock. Furthermore, uncertainty in the housing market makes the cash flow and leverage used for innovation performance. Finally, innovation investment has a substitution effect on housing investment once there is a policy shock in limiting housing price in China.