Document Type

Journal Article

Department/Unit

Department of Economics

Title

Economic policy uncertainty spillovers in small open economies: The case of Hong Kong

Language

English

Abstract

This paper studies the extent to which economic policy uncertainty shocks in major economies affect real economic activity in small open economies. We use Hong Kong as a case study. Following Baker, Bloom and Davis (2016), we construct a newspaper‐based economic policy uncertainty index for Hong Kong for the period 1998 to 2016. We estimate international spillovers of uncertainty and find large spillovers of uncertainty from major economies to Hong Kong. Furthermore, using a structural vector autoregressive approach, we show that a rise in domestic economic policy uncertainty leads to tight financial conditions, and lower investment and vacancy posting, dampening domestic output growth.

Keywords

Policy uncertainty, spillovers, crisis transmission.

Publication Date

2018

Source Publication Title

Pacific Economic Review

Publisher

Wiley

DOI

10.1111/1468-0106.12283

Link to Publisher's Edition

https://doi.org/10.1111/1468-0106.12283

ISSN (print)

1361374X

ISSN (electronic)

14680106

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