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Effects of US Policy Uncertainty on Swedish GDP Growth

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In this paper, we study the effects of US policy uncertainty – measured as the policy uncertainty index of Baker et al. (2013) – on Swedish GDP growth. Another source of spillovers of shocks to small open economies is thereby examined. We apply both Bayesian VAR models and spectral analysis to quarterly data from 1988 to 2013. Results show that increasing US policy uncertainty has significant negative effects on Swedish GDP growth. The effect seems to primarily stem from effects on investment growth and export growth. Our findings could prove useful to those who analyse and forecast the Swedish economy and potentially also other similar small open economies.

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  • Stockhammar, Pär & Österholm, Pär, 2014. "Effects of US Policy Uncertainty on Swedish GDP Growth," Working Papers 135, National Institute of Economic Research.
    • Handle: RePEc:hhs:nierwp:0135
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    More about this item

    Keywords

    Spillovers; Small open economy; Political uncertainty index; Bayesian VAR; Spectral analysis;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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