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

17 Pages Posted: 17 Jan 2014  

Scott R. Baker

Northwestern University, Kellogg School of Management, Department of Finance

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Brandice Canes-Wrone

Princeton University - Department of Political Science; Princeton University - Woodrow Wilson School of Public and International Affairs; Massachusetts Institute of Technology (MIT)

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER)

Jonathan Rodden

Stanford University

Date Written: January 2014

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.

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Suggested Citation

Baker, Scott R. and Bloom, Nicholas and Canes-Wrone, Brandice and Davis, Steven J. and Rodden, Jonathan, Why Has U.S. Policy Uncertainty Risen Since 1960? (January 2014). NBER Working Paper No. w19826. Available at SSRN: https://ssrn.com/abstract=2380475

Scott R. Baker (Contact Author)

Northwestern University, Kellogg School of Management, Department of Finance ( email )

Evanston, IL 60208
United States

Nicholas Bloom

Stanford University - Department of Economics ( email )

Landau Economics Building, Room 231
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-7836 (Phone)

HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Brandice Canes-Wrone

Princeton University - Department of Political Science ( email )

Corwin Hall
Princeton, NJ 08544-1013
United States

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Massachusetts Institute of Technology (MIT)

50 Memorial Drive
Cambridge, MA 02139-4307
United States

Steven J. Davis

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7312 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jonathan Rodden

Stanford University ( email )

Stanford, CA 94305
United States

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