| 来源类型 | Report |
| 规范类型 | 报告 |
| Policy uncertainty and the economy | |
| Kevin A. Hassett; Joseph W. Sullivan | |
| 发表日期 | 2016-08-04 |
| 出版年 | 2016 |
| 语种 | 英语 |
| 摘要 | Key Points Although much progress has been made in identifying important correlations between uncertainty and economic activity, concerns about causal identification remain. However, new empirical measures of uncertainty allow economists to ask questions with a precision likely to advance enduring debates on sources of uncertainty and their effects. The implications of elevated political polarization offer the most parsimonious explanation of what are otherwise puzzling results on the economic effects of uncertainty. According to historical data, in the month of a United States presidential election, the odds of the US entering a recession within the next 12 months are roughly twice what they are in a typical month. Introduction Uncertainty has remained a concept central to economics for almost as long as the science has existed. The literature has exploded in recent years, as breakthroughs in modeling and measurement have allowed researchers to identify both the theoretical impacts of heightened uncertainty under varying assumptions, and the likely empirical manifestations of these impacts. This paper provides a review of the latest developments in this literature and provides new evidence of the impact of uncertainty on economic activity. We proceed in a number of steps. First, we situate the modern literature on policy uncertainty in the history of economic thought, as past quandaries and debates in the field presage many of those that continue. Second, we review the contemporary theory-focused literature. Though the literature has developed a number of models, the lack of congruity between theory and empirical calibration seems to remain an area for future work in the field to fill. Third, we review the indices that have been constructed in attempts to quantify uncertainty and facilitate its empirical study. The differences among various indices developed to date reflect conceptual fault lines concerning what constitutes “uncertainty” that have existed in the field since the 1920s. Fourth, in a testament to the possibilities now offered by the development of indices of uncertainty, we analyze the relationship between statutory changes to the tax code and uncertainty. We find that “endogenous” tax changes decrease economic policy uncertainty, while a certain species of “exogenous” tax changes increases economic policy uncertainty. Fifth, we examine recent attempts to overcome the identification issues that have belied empirical attempts to assess the causal impact of uncertainty. None of the attempts to overcome these issues, we argue, seems to have been successful to date. Sixth, we examine the literature that examines the relationships between elections and uncertainty, economic activity and financial markets. Many empirical papers fail to distinguish between countries in which the timing of an election is well known in advance (e.g., the United States) and those in which the timing of an election is endogenously determined (e.g., the UK or Israel). Those that do, however, nonetheless find significant effects of elections even in countries in which the timing of an election is well known to market participants far in advance. We explore in detail the relationship between elections and uncertainty, and provide new evidence relating elections to financial variables and the probability of recession. Political polarization, we argue, most parsimoniously explains the results. In aggregate, this review and the new results we present suggest the existence of at least three remaining gaps that stand to be filled in this literature: (1) the robust matching of well-specified theoretical models to empirical regularities; (2) the development of causal identification strategies for overcoming endogeneity concerns; and (3) Given the possible prominence of political effects in mediating the relationship between uncertainty and economic activity, a renewed focus on political mechanisms as both effects and causes of economic policy uncertainty. Read the full report. |
| 主题 | Public Economics |
| 标签 | economics |
| URL | https://www.aei.org/research-products/report/policy-uncertainty-and-the-economy/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/206280 |
| 推荐引用方式 GB/T 7714 | Kevin A. Hassett,Joseph W. Sullivan. Policy uncertainty and the economy. 2016. |
| 条目包含的文件 | ||||||
| 文件名称/大小 | 资源类型 | 版本类型 | 开放类型 | 使用许可 | ||
| Policy-Uncertainty.p（1969KB） | 智库出版物 | 限制开放 | CC BY-NC-SA | 浏览 | ||
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