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Why Has U.S. Policy Uncertainty Risen Since 1960?

Author

Listed:
  • Scott R. Baker
  • Nicholas Bloom
  • Brandice Canes-Wrone
  • Steven J. Davis
  • Jonathan A. Rodden

Abstract

There appears to be a strong upward drift in policy-related economic uncertainty after 1960. We consider two classes of explanations for this rise. The first stresses growth in government spending, taxes, and regulation. A second stresses increased political polarization and its implications for the policy-making process and policy choices. While the evidence is inconclusive, it suggests that both factors play a role in driving the secular increase in policy uncertainty over the last half century.

Suggested Citation

  • Scott R. Baker & Nicholas Bloom & Brandice Canes-Wrone & Steven J. Davis & Jonathan A. Rodden, 2014. "Why Has U.S. Policy Uncertainty Risen Since 1960?," NBER Working Papers 19826, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19826
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    File URL: http://www.nber.org/papers/w19826.pdf
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    References listed on IDEAS

    as
    1. N. Bloom., 2016. "Fluctuations in uncertainty," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
    2. David S. Lee & Enrico Moretti & Matthew J. Butler, 2004. "Do Voters Affect or Elect Policies? Evidence from the U. S. House," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 807-859.
    3. repec:cup:apsrev:v:106:y:2012:i:01:p:103-122_00 is not listed on IDEAS
    4. repec:wly:amposc:v:53:y:2009:i:3:p:666-680 is not listed on IDEAS
    5. Stephen Ansolabehere & Jonathan Rodden & James M. Snyder Jr., 2006. "Purple America," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 97-118, Spring.
    6. Hirano, Shigeo & Snyder, James M. & Ansolabehere, Stephen & Hansen, John Mark, 2010. "Primary Elections and Partisan Polarization in the U.S. Congress," Quarterly Journal of Political Science, now publishers, vol. 5(2), pages 169-191, August.
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    Citations

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    Cited by:

    1. Paul Ormerod & Rickard Nyman & David Tuckett, 2015. "Measuring Financial Sentiment to Predict Financial Instability: A New Approach based on Text Analysis," Papers 1508.05357, arXiv.org.
    2. Thiem, Christopher, 2018. "Cross-category spillovers of economic policy uncertainty," Ruhr Economic Papers 744, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    4. Netšunajev, Aleksei & Glass, Katharina, 2017. "Uncertainty and employment dynamics in the euro area and the US," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 48-62.
    5. repec:jpe:journl:1481 is not listed on IDEAS
    6. Caggiano, Giovanni & Castelnuovo, Efrem & Figueres, Juan Manuel, 2017. "Economic policy uncertainty and unemployment in the United States: A nonlinear approach," Economics Letters, Elsevier, vol. 151(C), pages 31-34.
    7. repec:eee:ecosys:v:42:y:2018:i:4:p:569-583 is not listed on IDEAS
    8. Stilianos Fountas & Panagiota Karatasi & Paraskevi Tzika, 2018. "Economic Policy Uncertainty in Greece: Measuring Uncertainty for the Greek Macroeconomy," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 16(1), pages 80-92.
    9. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2015. "Going to Extremes: Politics after Financial Crises, 1870-2014," CESifo Working Paper Series 5553, CESifo Group Munich.
    10. Funke, Manuel & Schularick, Moritz & Trebesch, Christoph, 2016. "Going to extremes: Politics after financial crises, 1870–2014," European Economic Review, Elsevier, vol. 88(C), pages 227-260.
    11. repec:eee:jaecon:v:67:y:2019:i:1:p:36-57 is not listed on IDEAS
    12. repec:eee:finmar:v:39:y:2018:i:c:p:111-125 is not listed on IDEAS
    13. repec:wly:jmoncb:v:51:y:2019:i:1:p:227-259 is not listed on IDEAS
    14. repec:eee:corfin:v:51:y:2018:i:c:p:20-49 is not listed on IDEAS
    15. John W. Keating & Logan J. Kelly & A. Lee Smith & Victor J. Valcarcel, 2019. "A Model of Monetary Policy Shocks for Financial Crises and Normal Conditions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(1), pages 227-259, February.
    16. repec:taf:wjabxx:v:19:y:2018:i:2:p:262-278 is not listed on IDEAS
    17. repec:eee:dyncon:v:103:y:2019:i:c:p:158-184 is not listed on IDEAS
    18. Thiem, Christopher, 2018. "Cross-category, trans-Pacific spillovers of policy uncertainty and financial market volatility," Ruhr Economic Papers 782, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    19. repec:eee:ecmode:v:79:y:2019:i:c:p:47-56 is not listed on IDEAS

    More about this item

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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