# How does economic policy uncertainty comove with stock markets: New evidence from symmetric thermal optimal path method

**Authors:** Ying-Hui Shao, Yan-Hong Yang, Wei-Xing Zhou  
**arXiv:** [2106.04421](https://arxiv.org/abs/2106.04421)  
**Date:** 2021-06-08  
**Summary page:** https://www.summarizepaper.com/en/paper/2106.04421v2/

## Key points

- Study titled "How does economic policy uncertainty comove with stock markets: New evidence from symmetric thermal optimal path method"
- Authors: Ying-Hui Shao, Yan-Hong Yang, and Wei-Xing Zhou
- Utilized the symmetric thermal optimal path (TOPS) method to analyze dynamic interactions in emerging and developed markets
- Findings reveal distinct patterns of economic policy uncertainty's influence on stock markets across regions
- Economic policy uncertainty drives the stock market in China, contrasting with the UK and US where stock markets lead
- Significant lead-lag relationships observed among China, UK, and US during extreme events
- Implications for investors and policymakers include informing investment strategies and policy decisions in a changing global financial landscape

## Summary

In their study titled "How does economic policy uncertainty comove with stock markets: New evidence from symmetric thermal optimal path method," authors Ying-Hui Shao, Yan-Hong Yang, and Wei-Xing Zhou delve into the intricate relationship between domestic economic policy uncertainty and stock markets. Utilizing the symmetric thermal optimal path (TOPS) method, the researchers analyze the dynamic interactions in both emerging and developed markets. Their findings reveal distinct patterns in how economic policy uncertainty influences stock markets across different regions. Specifically, they observe that in China, economic policy uncertainty drives the stock market, highlighting a unique relationship compared to the UK and the US where stock markets take on a leading role. Moreover, the study uncovers significant lead-lag relationships among these three countries, particularly during extreme events. The implications of this research are far-reaching for both investors and policymakers alike. By shedding light on the nuanced interplay between economic policy uncertainty and stock market dynamics, this study provides valuable insights that can inform investment strategies and policy decisions in an ever-changing global financial landscape.