Economic fluctuations and policy uncertainty

Abstract

Economic fluctuations have an impact across society and have been a prevalent topic of analysis, most fervently since the Great Depression. This study is an empirical exploration of the role of economic policy uncertainty upon variations in economic activity. With an aim to draw insight into the more contemporaneous instability, through analysis of the interwar period experience, a phase of considerable global macroeconomic flux. The research considers prominent historical episode clusters comparing them with various components of economic policy uncertainty and subsequently the shifts in economic activity. Hence supplements the existing economic crises and uncertainty literature particularly relating to prolonged periods of recession. Advancing with the less covered yet significant role of sectoral imbalances. A specific focus of the study is a look into UK and US output fluctuations and uncertainty, with comparative as well as more global spill over analysis. The contrast of sectoral disparities linked with policy uncertainty provides intriguing insight, thus far given scarce treatment in prior studies. Overall findings indicate significance to the role of policy uncertainty upon economic fluctuations and that the interactions with sectoral shifts are topics worthy of further exploration. With pertinence to the understanding of the evolving currents in post financial crisis turbulence.

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ORCID for Taufiq Choudhry: orcid.org/0000-0002-0463-0662

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