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What Type of Policy Uncertainty Matters for Business?

  • 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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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
Date of revision:
Handle: RePEc:eti:dpaper:13076
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  1. Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
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  9. Lorenzo E. Bernal-Verdugo & Davide Furceri & Dominique M. Guillaume, 2013. "The Dynamic Effect of Social and Political Instability on Output; The Role of Reforms," IMF Working Papers 13/91, International Monetary Fund.
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  11. Bialkowski, Jedrzej & Gottschalk, Katrin & Wisniewski, Tomasz, 2006. "Stock market volatiltity around national elections," MPRA Paper 302, University Library of Munich, Germany, revised Nov 2006.
  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. Fabrizio Carmignani, 2003. "Political Instability, Uncertainty and Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 1-54, February.
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  16. Alan Carruth & Andy Dickerson & Andrew Henley, 1998. "What Do We Know About Investment Under Uncertainty?," Studies in Economics 9804, School of Economics, University of Kent.
  17. Choi, Sangyup, 2013. "Are the effects of Bloom’s uncertainty shocks robust?," Economics Letters, Elsevier, vol. 119(2), pages 216-220.
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