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What Type of Policy Uncertainty Matters for Business?

Listed author(s):
  • MORIKAWA Masayuki

This paper uses data from an original survey of Japanese listed companies to present empirical findings concerning subjective uncertainties over economic policies and their effects on business operations. Companies perceive uncertainty over the future course of certain economic policies, such as an international trade policy and the social security system. Uncertainty regarding the tax system, trade policy, and environmental policy can have substantial effects on the managerial decisions, especially on equipment investment and overseas activities. Among non-manufacturing companies, uncertainty regarding the social security system and labor market regulations affects employee hiring and organizational restructuring. To achieve economic growth by promoting future-oriented investment, it is essential to improve the predictability of fundamental economic policies and institutions.

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File URL: http://www.rieti.go.jp/jp/publications/dp/13e076.pdf
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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13076.

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Length: 22 pages
Date of creation: Sep 2013
Handle: RePEc:eti:dpaper:13076
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  1. Nick Bloom, 2007. "Uncertainty and the Dynamics of R&D," American Economic Review, American Economic Association, vol. 97(2), pages 250-255, May.
  2. Luigi Guiso & Giuseppe Parigi, 1999. "Investment and Demand Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 185-227.
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  8. Carruth, Alan & Dickerson, Andrew & Henley, Andrew, 2000. " What Do We Know about Investment under Uncertainty?," Journal of Economic Surveys, Wiley Blackwell, vol. 14(2), pages 119-153, April.
  9. Choi, Sangyup, 2013. "Are the effects of Bloom’s uncertainty shocks robust?," Economics Letters, Elsevier, vol. 119(2), pages 216-220.
  10. Ben S. Bernanke, 1983. "Irreversibility, Uncertainty, and Cyclical Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 98(1), pages 85-106.
  11. Aisen, Ari & Veiga, Francisco José, 2013. "How does political instability affect economic growth?," European Journal of Political Economy, Elsevier, vol. 29(C), pages 151-167.
  12. MORIKAWA Masayuki, 2010. "Volatility, Nonstandard Employment, and Productivity: An empirical analysis using firm-level data," Discussion papers 10025, Research Institute of Economy, Trade and Industry (RIETI).
  13. Leahy, John V & Whited, Toni M, 1996. "The Effect of Uncertainty on Investment: Some Stylized Facts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(1), pages 64-83, February.
  14. MATSUURA Toshiyuki, 2013. "Why Did Manufacturing Firms Increase the Number of Non-regular Workers in the 2000s? Does international trade matter?," Discussion papers 13036, Research Institute of Economy, Trade and Industry (RIETI).
  15. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 707-727.
  16. Bontempi, Maria Elena & Golinelli, Roberto & Parigi, Giuseppe, 2010. "Why demand uncertainty curbs investment: Evidence from a panel of Italian manufacturing firms," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 218-238, March.
  17. Vivek Ghosal & Prakash Loungani, 2000. "The Differential Impact of Uncertainty on Investment in Small and Large Businesses," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 338-343, May.
  18. MORIKAWA Masayuki, 2012. "The Effects of the Great East Japan Earthquake and Policy Priorities for Restoring Economic Growth: Evidence from a survey of Japanese firms (Japanese)," Policy Discussion Papers (Japanese) 12010, Research Institute of Economy, Trade and Industry (RIETI).
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