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Economic Brief

January 2014, No. 14-01

Learning about Fiscal Policy Uncertainty

Christian Matthes and Tim Sablik

In response to the financial crisis and recession of 2007-09, the federal government enacted a number of emergency fiscal policies intended to aid recovery. These included short-term stimulus measures, such as the American Recovery and Reinvestment Act of 2009, and temporary tax reductions, such as the payroll tax cut in 2010. However, the unconventional and transitory nature of these fiscal policies may have contributed to greater economic uncertainty. Given the slow recovery that has followed the recession, economists are studying how such uncertainty might impact growth.

Additional Resources

Baker, Scott, Nick Bloom, and Steven J. Davis, "Has Economic Policy Uncertainty Hampered the Recovery?," BFI Working Paper Series No. 2012-003, February 3, 2012.

Economic Policy Uncertainty, a website maintained primarily by Scott Baker, Nick Bloom and Steven Davis

Giannitsarou, Chryssi, "Supply-Side Reforms and Learning Dynamics," Journal of Monetary Economics, March 2006, vol. 53, no. 2, pp. 291–309. (A previous version is available online.)

Hollmayr, Josef, and Christian Matthes, "Learning about Fiscal Policy and the Effects of Policy Uncertainty," Federal Reserve Bank of Richmond Working Paper No. 13-15, September 2013.

Mitra, Kaushik, George W. Evans, and Seppo Honkapohja, "Fiscal Policy and Learning," Centre for Dynamic Macroeconomic Analysis, University of St. Andrews, Working Paper No. 1202, June 18, 2013.

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