Why Has U.S. Policy Uncertainty Risen Since 1960?
17 Pages Posted: 17 Jan 2014 Last revised: 5 Feb 2014
Date Written: January 2014
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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