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The impact of fundamental uncertainties on economic growth

Author

Listed:
  • Ömer Yalçinkaya

    (Department of Economics, Faculty of Economics and Administrative Sciences, Atatürk University, Erzurum, Turkey)

  • Ali Kemal Çelik

    (Department of Quantitative Methods, Faculty of Economics and Administrative Sciences, Ardahan University, Çıldır Yolu, 75000, Ardahan, Turkey)

Abstract

This paper addresses the impact of fundamental (economic, political and geopolitical) uncertainties on GDP growth of the world’s largest 20 economies (W-20) using the Cobb-Douglas total production function within the scope of the second-generation panel data methodology for 1990–2016. The aim of the paper is to explore whether these uncertainties lead to a contractionary impact on growth as suggested by the economic theory. The estimation results revealed that indeed this was the case. Our results also indicate that the global uncertainties led the economic growth rates of the selected countries to perform below their exact potential since the 2008 global economic crisis and to fail to attain an expected recovery during the process.

Suggested Citation

  • Ömer Yalçinkaya & Ali Kemal Çelik, 2021. "The impact of fundamental uncertainties on economic growth," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 71(2), pages 213-234, June.
    • Handle: RePEc:aka:aoecon:v:71:y:2021:i:2:p:213-234
    DOI: 10.1556/032.2021.00011
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    More about this item

    Keywords

    economic; political and geopolitical uncertainty; sustainability of economic growth; second generation panel data analysis;
    All these keywords.

    JEL classification:

    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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