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

Scott R. Baker; Nicholas Bloom; Brandice Canes-Wrone; Steven J. Davis; Jonathan A. Rodden

doi:10.3386/w19826

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

Scott R. Baker, Nicholas Bloom, Brandice Canes-Wrone, Steven J. Davis & Jonathan A. Rodden

Working Paper 19826

DOI 10.3386/w19826

Issue Date 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.

We thank the National Science Foundation, the Sloan Foundation and the Initiative on Global Markets and the Stigler Center at the University of Chicago for financial support, and participants at the American Economic Association meetings in Philadelphia for comments. This paper is a draft for the American Economic Review Papers and Proceedings. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Nicholas Bloom
I worked for McKinsey and company as a management consultant from 2001-2002. I have not received any funding from them after that time.

I am part of the Toulouse Network for Information Technology, which carries out research on IT and productivity. From this network I receive an annual honorarium, which is funded by Microsoft.

I do occasional consulting on management practices for government and policy agencies, like the Canadian Government, the World Bank, the European Union, the British Government, and the European Bank of Reconstruction and Development.

I produced a report in 2008 for the World Economic Forum on management practices in private equity for which I received an honorarium.

I occasionally am a paid speaker at corporate events at which I discuss among other things management practices and policy uncertainty.

Brandice Canes-Wrone
We are also grateful to the Institute for Advanced Study for financial support.
MARC RIS BibTeΧ

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

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