State of Confusion: Economic Policy Uncertainty and International Trade and Investment
22 Pages Posted: 24 Mar 2020
Date Written: June 2019
Uncertainty about economic policy in Australia and the United States has increased episodically since the Global Financial Crisis. Existing research focuses on the effects on economic activity, employment and investment. I extend this work to examine the effect of policy uncertainty on global trade volumes, industrial production and cross‐border trade and investment for Australia and the United States. Australia's relative resilience to policy uncertainty shocks reflects a larger role for the exchange rate in intermediating foreign shocks and the absence of a recession in Australia during the sample period considered.
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