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High policy uncertainty, the responsibility of which rests with both major political parties, has been undermining the US economic recovery

Authors
Publisher
Blog post from London School of Economics & Political Science
Publication Date
Keywords
  • Hc Economic History And Conditions
  • Jk Political Institutions (United States)
Disciplines
  • Economics
  • Political Science

Abstract

John van Reenen, Nicholas Bloom, Scott Baker and Steven Davis argue that one of the factors behind the sluggish economic recovery in the US is increased policy uncertainty. In their view, the two parties and the polarisation of politics are responsible for the high uncertainty. Regardless of who wins the presidency, the two houses of Congress are likely to remain divided by party, thus increasing political polarisation. This analysis provides a clear warning for the UK regarding the negative economic effects of policy uncertainty and the dangers of political polarisation.

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