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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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    References listed on IDEAS

    as
    1. N. Bloom., 2016. "Fluctuations in uncertainty," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
    2. Jacob Jensen & Ethan Kaplan & Suresh Naidu & Laurence Wilse-Samson, 2012. "Political Polarization and the Dynamics of Political Language: Evidence from 130 Years of Partisan Speech," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 43(2 (Fall)), pages 1-81.
    3. John Dawson & John Seater, 2013. "Federal regulation and aggregate economic growth," Journal of Economic Growth, Springer, vol. 18(2), pages 137-177, June.
    4. 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.
    5. Canes-Wrone, Brandice & Park, Jee-Kwang, 2012. "Electoral Business Cycles in OECD Countries," American Political Science Review, Cambridge University Press, vol. 106(1), pages 103-122, February.
    6. Jacob Jensen & Ethan Kaplan & Suresh Naidu & Laurence Wilse-Samson, 2012. "Political Polarization and the Dynamics of Political Language: Evidence from 130 Years of Partisan Speech," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 1-81.
    7. Nolan McCarty & Keith T. Poole & Howard Rosenthal, 2009. "Does Gerrymandering Cause Polarization?," American Journal of Political Science, John Wiley & Sons, vol. 53(3), pages 666-680, July.
    8. 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.
    9. 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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    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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