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<p>This study investigates the heterogeneous effects of Economic Policy Uncertainty (EPU) on economic growth across 21 countries from 1997 to 2022. The objective is to analyze both the long-run and short-run relationships, incorporating causality analysis and capturing the heterogeneity across countries.The study has employed various panel data econometric models such as Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Augmented Mean Group (AMG) estimators to capture both long-run and short-run relationships between EPU and GDP. The results show that EPU has a significant negative effect on economic growth, with the magnitude of this impact varying across different income levels and trade environments. Additionally, this study incorporates the heterogeneous effects of EPU across different quantiles of economic growth, revealing important disparities in how countries respond to uncertainty. While higher-income countries demonstrate greater resilience to policy uncertainty, developing economies exhibit a stronger negative correlation between EPU and growth, likely due to weaker institutional frameworks and vulnerability to external shocks. A bidirectional causality between EPU and GDP is also identified, suggesting a feedback loop where fluctuations in GDP can influence future levels of policy uncertainty. The findings highlight the critical role of policy clarity and institutional stability in mitigating the adverse effects of EPU, particularly for developing nations. This research contributes to the broader literature on uncertainty and growth by offering new insights into the varying impacts of EPU across a global sample of countries.</p>

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Growth under uncertainty-heterogeneous impacts of economic policy shocks: evidence from a panel quantile regression

  • 期刊论文

  • 发表日期：

    2026年5月25日

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  • Jadhav Chakradhar,
  • Alok Aditya

摘要

This study investigates the heterogeneous effects of Economic Policy Uncertainty (EPU) on economic growth across 21 countries from 1997 to 2022. The objective is to analyze both the long-run and short-run relationships, incorporating causality analysis and capturing the heterogeneity across countries.The study has employed various panel data econometric models such as Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Augmented Mean Group (AMG) estimators to capture both long-run and short-run relationships between EPU and GDP. The results show that EPU has a significant negative effect on economic growth, with the magnitude of this impact varying across different income levels and trade environments. Additionally, this study incorporates the heterogeneous effects of EPU across different quantiles of economic growth, revealing important disparities in how countries respond to uncertainty. While higher-income countries demonstrate greater resilience to policy uncertainty, developing economies exhibit a stronger negative correlation between EPU and growth, likely due to weaker institutional frameworks and vulnerability to external shocks. A bidirectional causality between EPU and GDP is also identified, suggesting a feedback loop where fluctuations in GDP can influence future levels of policy uncertainty. The findings highlight the critical role of policy clarity and institutional stability in mitigating the adverse effects of EPU, particularly for developing nations. This research contributes to the broader literature on uncertainty and growth by offering new insights into the varying impacts of EPU across a global sample of countries.