Hoover and Becker Friedman Institute Cohost Conference on Economic Consequences of Policy Uncertainty

Friday, October 14, 2016
Hoover Institution, The Johnson Center in Washington DC

On September 13, 2016, the Hoover Institution partnered with the Becker Friedman Institute at the University of Chicago to host a daylong conference titled “Elections, Policymaking, and Economic Uncertainty.”

John B. Taylor, the George P. Shultz Senior Fellow in Economics at Hoover, organized the conference in cooperation with Steven J. Davis and Nobel Prize–winner Lars Peter Hansen, both professors at the University of Chicago and scholars at the Becker Friedman Institute. They designed the conference to explore the causes and effects of policy uncertainty and democratic decision making. 

The organizers’ call for papers on this subject yielded five fascinating, data-driven analyses that focused on the economic repercussions of policy uncertainty at the macro and micro level.

Mike Bordo, Distinguished Visiting Fellow at Hoover and a professor of economics at Rutgers University, presented a paper on the restrictive effect of policy uncertainty on bank credit.

Moritz Schularick of the University of Bonn’s paper, “Going to Extremes: Politics after Financial Crisis, 1870–2014,” coded a large new dataset to survey each financial crisis in an advanced economy going back to 1870 and identified those crises’ effects on electoral outcomes.

Hannes Mueller, researcher at the Institute of Economic Analysis, discussed the relationship of limits on executive power and foreign capital inflows by looking at thirty years of investment data from the Netherlands.

Tarek Hassan, associate professor of Finance and Economics at the University of Chicago’s Booth School of Business, presented a paper based on an impressive collection of transcripts from nearly 90,000 earnings conference calls from US firms. Hassan and colleagues ingeniously quantified instances in the transcripts where uncertainty about policy issues is cited as an influence on the firms operations and compared their frequency to other metrics of firm health and uncertainty hedges, such as corruption and lobbying.

Kaveh Majlesi of Lund University discussed “Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure,” which examines the effect of labor market exposure to foreign stimuli on electoral outcomes in the US.

Following the symposium, former chairman of the Federal Reserve Alan Greenspan, along with Chris DeMuth, distinguished fellow at the Hudson Institute, joined conference organizers Taylor and Davis for a panel discussion of concerning policy and performance trends in the global economy and potential solutions.

The full collection of papers and other materials presented and discussed at the conference can be found here, along with a photo gallery and writeup summarizing the research and presentations. Taylor’s Economic One review of the conference also provides an excellent summary of the papers and their findings.