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Goldman Sachs On Uncertainty – Business Insider

October 24, 2012 Leave a comment Go to comments

Goldman’s Jan Hatzius and Sven Jari Stehn put out a great note on Friday that’s generating some buzz (Krugman, FT Alphaville). The topic: Uncertainty, and whether it’s really playing a depressing role in the economy.

The GOP — along with many of the tycoons that come on shows like Squawk Box — like to slam policy uncertainty for creating an environment in which businesses are immobilized by fear of the unknown.

Hatzius and Stehn find that to be bunk.

They write:

A common explanation for the economy’s disappointing performance in recent years is a rise in “policy uncertainty,” a term popularized by Nicholas Bloom of Stanford University and his co-authors. They suggest that the increase in their “US policy uncertainty index”— which is based on news searches, expiring tax provisions, and forecaster disagreement—has depressed real GDP by more than 3%.

via Goldman Sachs On Uncertainty – Business Insider.

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