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The Impact of Global Uncertainties on Economic Growth: Evidence from the US Economy (1996: Q1-2018: Q4)

Ömer Yalçinkaya () and Ali Kemal Çeli̇k ()
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Ömer Yalçinkaya: Atatürk University, Faculty of Economics and Administrative Sciences, Department of Economics, 25240, Erzurum, Turkey
Ali Kemal Çeli̇k: Ardahan University, Faculty of Economics and Administrative Sciences, Department of Quantitative Methods, 75002, Ardahan, Turkey

Journal for Economic Forecasting, 2021, issue 2, 35-54

Abstract: This paper econometrically examines the impact of uncertainties on the global economy caused by the recent economic, political, and geopolitical (EPG) events, and on the economic growth of the US using extended Cobb-Douglas production function and linear and nonlinear time series analysis for the sample period 1996: Q1-2018: Q4. In this regard, the paper mainly purposes to empirically determine whether or not the global EPG uncertainties have a contractionary impact on the economic growth of the US as previously predicted by the existing literature. The economic growth of the US takes part on the main axis of EPG events with its crucial position on global economic area. The linear and nonlinear time series analyses reveal that the EPG uncertainties have a statistically significant negative impact on the growth of the US on both short and long term during the sample period and that there is a unidimensional causality relationship from the EPG uncertainties to economic growth. The empirical findings also confirm that the EPG uncertainties have contractionary impact on the economic growth of the US during the sample period. Moreover, the EPG uncertainties may be considered as an important constraint of sustainability of the economic growth rates of the US at its potential level and permanent economic recovery.

Keywords: global uncertainties; sustainability of economic growth; Cobb-Douglas production function; linear and nonlinear time series (search for similar items in EconPapers)
JEL-codes: C40 F43 O47 (search for similar items in EconPapers)
Date: 2021
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