A Study of the Impact of U.S. Economic Policy Uncertainty on Abnormal Cross-Border Capital Flows

<b> </b>The rise of U.S. economic policy uncertainty significantly affects both the scale and direction of abnormal cross-border capital flows. Based on the theories of real options, risk aversion, capital localization preference and so on, this paper analyzes data from various economies spanning from the first quarter of 1998 to the third quarter of 2024, and deeply discusses the effects of U.S. economic policy uncertainty on abnormal cross-border capital flows. The study finds that: U.S. economic policy uncertainty notably reduces the frequency of cross-border capital flight and increases the frequency of retrenchment,reduces the frequency of cross-border capital surges and increases the frequency of stops; domestic and foreign interest rate differentials, exchange rates, asset prices, and risk contagion serve as conduits, each exerting varying degrees of influence on abnormal cross-border capital flows; there is heterogeneity in the impacts of fiscal, monetary, and trade policy uncertainty on both total and classified abnormal capital flows; stock market correlation substantially increases the frequency of capital flight and surges, acting as a reverse moderator. This study underscores the necessity of mitigating economic policy uncertainty and provides a theoretical foundation for policy governance, capital management, and investment decisions in other nations.