Based on the 2007~2017 panel data of 266 prefecture level cities in China, taking the per capita GDP as the measurement index, this paper uses the multi period double difference method to analyze the impact of the FTZ policy on the urban economy, and uses PSM-DID, placebo test, counterfactual test and detailed experimental group to test the robustness from different angles. The results show that FTZ can effectively promote the positive development of urban economy. The effects of FTZ policy on urban economic development are different from administrative level and location, and the effect is more obvious in cities with low administrative level and central and western cities. The FTZ promotes urban economic growth through four dynamic mechanisms: import and export trade, technological innovation, financial circulation and foreign direct investment, but the dynamic mechanisms of free trade zones in different locations are also different.