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Economic Policy Uncertainty in Turkey

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  • Spilimbergo, Antonio
  • Jirasavetakul, La-Bhus

Abstract

Uncertainty over economic policy plays a key role in economic outcomes. But evidence and quantification for emerging markets are elusive because of measurement and reverse causality issues. In this paper, we construct a news-based economic policy uncertainty (EPU) index for Turkey and assess how it affects Turkish firms. To disentangle the issues of endogeneity and reverse causality, we use a difference-in-differences approach. In sectors with large irreversible investment EPU has a greater effect on growth, investment, and leverage. The results are robust to different definitions of investment irreversibility, lag structure, and selection of sectors.

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  • Spilimbergo, Antonio & Jirasavetakul, La-Bhus, 2018. "Economic Policy Uncertainty in Turkey," CEPR Discussion Papers 13352, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13352
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    Cited by:

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    More about this item

    Keywords

    Policy uncertainty; Economic uncertainty; Turkey; Firm-level; Sector-level; Investment decisions; Employment growth; Leverage strategies; Diff-in-diff estimation;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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