The impact of fundamental uncertainties on economic growth

Ömer Yalçinkaya and Ali Kemal Çelik ()
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Ömer Yalçinkaya: Department of Economics, Faculty of Economics and Administrative Sciences, Atatürk University, Erzurum, Turkey
Ali Kemal Çelik: Department of Quantitative Methods, Faculty of Economics and Administrative Sciences, Ardahan University, Çıldır Yolu, 75000, Ardahan, Turkey

Acta Oeconomica, 2021, vol. 71, issue 2, 213-234

Abstract: This paper addresses the impact of fundamental (economic, political and geopolitical) uncertainties on GDP growth of the world’s largest 20 economies (W-20) using the Cobb-Douglas total production function within the scope of the second-generation panel data methodology for 1990–2016. The aim of the paper is to explore whether these uncertainties lead to a contractionary impact on growth as suggested by the economic theory. The estimation results revealed that indeed this was the case. Our results also indicate that the global uncertainties led the economic growth rates of the selected countries to perform below their exact potential since the 2008 global economic crisis and to fail to attain an expected recovery during the process.

Keywords: economic; political and geopolitical uncertainty; sustainability of economic growth; second generation panel data analysis (search for similar items in EconPapers)
JEL-codes: C40 F43 O47 (search for similar items in EconPapers)
Date: 2021
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