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Thursday, December 22, 2011

The GOP is Creating Uncertainty that Hurts the Economy

Menzie Chinn summarizes recent work on the economic impact of uncertainty. The bottom line -- that it's uncertainty about fiscal policy such as the GOP has created that hurts the economy -- is worth noting:

With the Republicans in the House maximizing policy uncertainty, I think it useful to recount some of the recent research on how uncertainty is affecting output...
For me, the policy conclusion emanating from all three of these pieces is that if there is important policy uncertainty, it is that related to fiscal policy. Empirical (i.e., econometric) evidence that regulatory uncertainty is important is, to my knowledge, non-existent. Hence, we can conclude that repeated crises over the raising of debt ceilings, continuing resolutions, and the like should be avoided.

    Posted by on Thursday, December 22, 2011 at 09:51 AM in Economics, Fiscal Policy, Politics, Regulation | Permalink  Comments (14)


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