The pandemic and economic policy uncertainty

被引:105
作者
Al-Thaqeb, Saud Asaad [1 ]
Algharabali, Barrak Ghanim [1 ]
Alabdulghafour, Khaled Tareq
机构
[1] Kuwait Univ, Coll Business Adm, POB 5969 Safat 13060, Kuwait, Kuwait
关键词
Capital investment; corporate finance; economic policy uncertainty; macro-economic & microeconomics; risk management; OIL PRICE SHOCKS; POLITICAL UNCERTAINTY; INVESTMENT; US; RETURNS; VOLATILITY; PREDICT; UNEMPLOYMENT; AGGREGATE; CHANNEL;
D O I
10.1002/ijfe.2298
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
The events that occurred after the worldwide diffusion of COVID-19 provide a real-life example of how uncertainty can severely affect the global economy. This paper reviews literature on the negative impacts of the economic policy uncertainty index (EPU) as developed by Baker et al., The Quarterly Journal of Economics, 2016, 131, 1593-1636 on individuals, businesses, governments, and economies at the local and international levels. This reveals that a high EPU is associated with adverse effects on households, corporations, and governments, which tend to delay many financial decisions under high uncertainty, which leads to lower consumption, fewer issuances of debt, fewer investments, and higher unemployment. The effects of political and regulatory uncertainty also extend to the commodity markets, such as the adverse effects on both oil and gasoline markets, and can potentially create adverse impacts on the crypto-currency market and its potential growth. We demonstrate that governmental uncertainty also affects financial, housing, and equity markets; debt issuances; and the entire economy. This underscores the importance of considering EPU as a risk factor. The association with several components of the global economy reflects not only the EPU index's critical influence, but also the importance of risk management. Our results lead us to consider the gravity of economic policy uncertainty and call for innovation across different sectors to mitigate its adverse effects.
引用
收藏
页码:2784 / 2794
页数:11
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