Policy Uncertainty and Long-Run Investment and Output across Countries
AbstractI present a model economy where policy uncertainty creates short-term bias in investment and leads to a higher capital price and lower long-run investment and output. I conduct a calibration exercise using a set of industry-level investment data across countries. Between the lowest-income and the highest-income countries, policy uncertainty can account for capital price and investment-level differences by a factor of about 3 and for the output-level difference by a factor of about 2. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 43 (2002)
Issue (Month): 2 (May)
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Other versions of this item:
- Byeongju Jeong, 2001. "Policy Uncertainty and Long-Run Investment and Output across Countries," Game Theory and Information 0012006, EconWPA.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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- Malik, Adeel & Temple, Jonathan, 2006.
"The Geography of Output Volatility,"
CEPR Discussion Papers
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- Adeel Malik & Jonathan R.W. Temple, 2005. "The Geography of Output Volatility," Economics Series Working Papers WPS/2005-07, University of Oxford, Department of Economics.
- Adeel Malik & Jonathan R W Temple, 2005. "The Geography of Output Volatility," CSAE Working Paper Series 2005-07, Centre for the Study of African Economies, University of Oxford.
- Mellati, Ali, 2008. "Uncertainty and investment in private sector: An analytical argument and a review of the economy of Iran," MPRA Paper 26655, University Library of Munich, Germany.
- Vatcharin Sirimaneetham, 2006. "Explaining policy volatility in developing countries," Bristol Economics Discussion Papers 06/583, Department of Economics, University of Bristol, UK.
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