Policy Uncertainty And Economic Activity
By Modeled Behavior:
By Karl Smith
Via Don Boudreaux, Baker, Bloom and Davis have a new paper on policy uncertainty. I draw your attention to this graph.
There are a couple of interesting things here.
1) Neither The Stimulus, nor ObamaCare show up on this index. The you can see Obama’s election. You can see the 2010 midterms. However, between those is a valley of “relative” calm.
2) The Debt Ceiling Debate is huge, much bigger policy uncertainty than Lehman.
Those two points are interesting because if you look through this graph, the elections, wars and financial panic produce economic policy uncertainty. I am not really sure if you can see a tax or spending package besides the minor Bush stimulus. You can’t see HillaryCare. You can’t see Medicare Part D. You can’t see the Clinton tax increases or the Bush tax cuts.
You can sort of see Gramm-Rudman but it barely beats
