Citation

Discussion Paper Details

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Title: Economic Policy Uncertainty in Turkey

Author(s): La-Bhus Fah Jirasavetakul and Antonio Spilimbergo

Publication Date: December 2018

Keyword(s): diff-in-diff estimation, economic uncertainty, employment growth, firm-level, Investment Decisions, leverage strategies, policy uncertainty, sector-level and Turkey

Programme Area(s): Development Economics, Macroeconomics and Growth and Public Economics

Abstract: Uncertainty over economic policy plays a key role in economic outcomes. But evidence and quantification for emerging markets are elusive because of measurement and reverse causality issues. In this paper, we construct a news-based economic policy uncertainty (EPU) index for Turkey and assess how it affects Turkish firms. To disentangle the issues of endogeneity and reverse causality, we use a difference-in-differences approach. In sectors with large irreversible investment EPU has a greater effect on growth, investment, and leverage. The results are robust to different definitions of investment irreversibility, lag structure, and selection of sectors.

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Bibliographic Reference

Jirasavetakul, L and Spilimbergo, A. 2018. 'Economic Policy Uncertainty in Turkey'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13352