Centre for Economic Performance (CEP)

Abstract for:

Economic Recovery and Policy Uncertainty

Scott R.  Baker,  Nick  Bloom,  Steven J.  Davis,  John  Van Reenen,  October 2012
Paper No' CEPUSA002: Full paper (pdf)
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Keywords: US Elections; uncertainty; recession

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Until some political mechanism creates incentives to elect moderate representatives who can reach across the ideological divide, the US seems destined to heightened levels of policy uncertainty for many years to come. Some research suggests that such uncertainty, particularly over economic policy, partly explains the sluggish nature of the recovery in America – and - according to one recent study, restoring policy uncertainty to levels that prevailed before the financial crisis would raise employment by an estimated 2.3 million over 18-24 months.

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