{
  "title": "Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty",
  "publication": "IMF Working Papers, November 15, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/11/15/fear-thy-neighbor-spillovers-from-economic-policy-uncertainty-45346",
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  "summary": "High levels of economic policy uncertainty in various parts of the world revamped the de- bate about its impact on economic activity. With increasingly stronger economic, financial, and political ties among countries, economic agents have more reasons to be vigilant of for- eign economic policy.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- High levels of economic policy uncertainty (EPU) in various parts of the world prompted renewed debate about its impact on economic activity.\n- With stronger economic, financial, and political ties among countries, economic agents are increasingly attentive to foreign economic policy.\n- The paper examines spillovers from EPU on other countries' economic activity and focuses on shocks originating in the United States, Europe, and China."
    },
    {
      "heading": "Methods",
      "content": "- Employs heterogeneous panel structural vector autoregressions (SVARs) to test for spillovers from EPU to other countries' economic activity.\n- Uses local projections to analyze responses to EPU shocks originating in the United States, Europe, and China."
    },
    {
      "heading": "Key Findings",
      "content": "- Economic policy uncertainty reduces growth in:\n  - real output\n  - private consumption\n  - private investment\n- Spillovers from abroad account for about two-thirds of the negative effect.\n- Uncertainty originating in the United States, Europe, and China reduces economic activity in the rest of the world.\n- Geographic distribution of spillover severity:\n  - Effects are mostly felt in Europe and the Western Hemisphere."
    },
    {
      "heading": "Policy Implications and Interpretation",
      "content": "- Because a large share of the negative impact of domestic EPU operates through foreign spillovers, policy coordination and awareness of international transmission channels are important.\n- Monitoring and mitigating EPU in major economies (United States, Europe, China) can have substantial benefits for global economic activity, particularly for Europe and the Western Hemisphere.\n\nSource: Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty, IMF Working Paper No. 2017/240.\n\n---\n\n Content in this bundle\n\n- Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty, WP/17/240, November 2017\n  - Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty, WP/17/240, November 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty, WP/17/240, November 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/11/15/fear-thy-neighbor-spillovers-from-economic-policy-uncertainty-45346"
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    "Authors: Nina Biljanovska, Francesco Grigoli, Martina Hengge",
    "Published: November 15, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484325032.001",
    "High levels of economic policy uncertainty (EPU) in various parts of the world prompted renewed debate about its impact on economic activity.",
    "With stronger economic, financial, and political ties among countries, economic agents are increasingly attentive to foreign economic policy.",
    "The paper examines spillovers from EPU on other countries' economic activity and focuses on shocks originating in the United States, Europe, and China.",
    "Employs heterogeneous panel structural vector autoregressions (SVARs) to test for spillovers from EPU to other countries' economic activity.",
    "Uses local projections to analyze responses to EPU shocks originating in the United States, Europe, and China.",
    "Economic policy uncertainty reduces growth in:",
    "Spillovers from abroad account for about two-thirds of the negative effect.",
    "Uncertainty originating in the United States, Europe, and China reduces economic activity in the rest of the world.",
    "Geographic distribution of spillover severity:",
    "Because a large share of the negative impact of domestic EPU operates through foreign spillovers, policy coordination and awareness of international transmission channels are important.",
    "Monitoring and mitigating EPU in major economies (United States, Europe, China) can have substantial benefits for global economic activity, particularly for Europe and the Western Hemisphere.",
    "**Fear Thy Neighbor: Spillovers from Economic Policy Uncertainty, WP/17/240, November 2017**"
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