Is there an effect of policy-related uncertainty on inflation? evidence from the United States under Trump

Refk Selmi, Jamal Bouoiyour (), Mark Wohar () and Youssef Errami

Post-Print from HAL

Abstract: This study bridges the existing literature on the macroeconomic effects of policy-related uncertainty and the literature on inflation dynamics and provide fresh insights on the impacts of policy-related uncertainty under President Donald Trump -coming from unforeseen events and actions of decision makers- on unanticipated inflation changes. With the increasingly volatile environment, developing effective resilience plan and hedging practices against rising policy uncertainty become fundamental in designing sensible risk management strategies. This paper compares the inflation-hedging abilities of oil, renewable energy and major precious metals (gold, palladium, platinum and silver). Under Trump, both economic and monetary policy uncertainties seem important for the observed changes in inflation. In times of rising uncertainty, doubts rise about the ability and the commitment of policy makers to deliver on their promises. In other words, policy-related uncertainties distort the Federal Reserve's monetary policy and harm its credibility. To reduce the costs of inflation surprises, an inflation-protecting asset allocation analysis is conducted. Gold and oil have proved to offer the most effective hedge against inflation under Trump and during periods of inflationary pressures.

Keywords: Policy-related uncertainty; inflation; hedges; improved dynamic downside risk analysis; the United States (search for similar items in EconPapers)
Date: 2020-02-17
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Published in Applied Economics, 2020, pp.1-16. ⟨10.1080/00036846.2020.1723786⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Is there an effect of policy-related uncertainty on inflation? evidence from the United States under Trump (2020)
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:hal:journl:hal-02482554

DOI: 10.1080/00036846.2020.1723786

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().