Economic Policy Uncertainty in Turkey

Antonio Spilimbergo and La-Bhus Jirasavetakul

No 13352, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Uncertainty over economic policy plays a key role in economic outcomes. But evidence and quantification for emerging markets are elusive because of measurement and reverse causality issues. In this paper, we construct a news-based economic policy uncertainty (EPU) index for Turkey and assess how it affects Turkish firms. To disentangle the issues of endogeneity and reverse causality, we use a difference-in-differences approach. In sectors with large irreversible investment EPU has a greater effect on growth, investment, and leverage. The results are robust to different definitions of investment irreversibility, lag structure, and selection of sectors.

Keywords: Policy uncertainty; Economic uncertainty; Turkey; Firm-level; Sector-level; Investment decisions; Employment growth; Leverage strategies; Diff-in-diff estimation (search for similar items in EconPapers)
JEL-codes: D80 E22 E66 L20 M51 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-ara and nep-mac
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Citations: View citations in EconPapers (4)

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Working Paper: Economic Policy Uncertainty in Turkey (2018)
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