The Macroeconomic Effects of Fiscal Policy Uncertainty around the World

Gee Hee Hong, Shikun (Barry) Ke and Anh Dinh Minh Nguyen

AEA Papers and Proceedings, 2025, vol. 115, 182-87

Abstract: How adverse is the impact of fiscal policy uncertainty on economic and financial variables? To answer this question, we construct a novel cross-country database of news-based fiscal policy uncertainty indicators. Importantly, we track fiscal events that attract global attention, which we refer to as "global" fiscal policy uncertainty. We find that heightened fiscal policy uncertainty triggers contractionary effects, lowering industrial production in both advanced and emerging market economies. It also raises sovereign borrowing costs, generates synchronous movements in global financial variables including risk aversion, and strengthens the US dollar, even after accounting for US monetary policy shocks.

JEL-codes: E32 E44 E52 E62 H63 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/pandp.20251011 (application/pdf)
https://doi.org/10.3886/E228943V1 (text/html)
https://www.aeaweb.org/articles/materials/23061 (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:apandp:v:115:y:2025:p:182-87

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/subscribe.html

DOI: 10.1257/pandp.20251011

Access Statistics for this article

AEA Papers and Proceedings is currently edited by William Johnson and Kelly Markel

More articles in AEA Papers and Proceedings from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().