Economic Policy Uncertainty and Industrial Activity: An Evidence from Pakistan

Tunio, Mohsin Waheed (2022): Economic Policy Uncertainty and Industrial Activity: An Evidence from Pakistan.

Abstract

Economic Policy Uncertainty is defined as a state wherein the policymakers, or institutions are uncertain about the future course of economic policies owing to a myriad of factors ranging from economic conditions and political tensions to geo-politics. The pioneering work of Baker, Bloom and Davis (2016) brought-in a new way of thinking in economics; whereby, introducing newspaper-based uncertainty to reflect on economic policies and resulting impacts thereof on a whole lot of economic conditions including real sector activity. This paper follows Choudhary, Pasha and Waheed (2020) to check if uncertainty has negative implications for production in Pakistan. I use the VECM model to see if there exists a long-term relationship between economic policy uncertainty and real activity in Pakistan; alongside that, I also make use of a bivariate SVAR to further enrich analysis. My findings conform to this notion that uncertainty does affect production and real activity.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic policy uncertainty, large-scale manufacturing, automobiles production, real activity
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation

References

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