Abstract: Establishing the models of GARCH and TGARCH based on related data collected through three variables, the growth rate of urban investment, the cumulative growth rate of fiscal expenditure, and the year-on -year growth rate of fiscal expenditure and broad money supply, the impacts of market volatility on investment behavior in the process of implementing fiscal policies was studied, and the effect of the fiscal policies under the new economic normal was further analyzed. The results show that the implementation of fiscal policies has a crowding-out effect on private investment, but the resulting space is limited. Fiscal policies act synergistically with monetary policies for the enforcement of fiscal policies stimulates the increase of investment instead. In the process of policy implementation, the influence of market sentiment on investment behavior is lasting, which decreases gradually over time and has an important reference value for future projections. When the negative news affects market sentiment, the implementation of fiscal policies weakens the effect of negative factors on the investment fluctuations; as the economy steps into the new normal, investor behavior tends to be cautious due to the slow pace of economic development.

Key words: fiscal policy, market sentiment, GARCH model, discretionary