Economic Reflections of Global Uncertainties: A Panel Data Analysis on OECD Countries

This study examines the effects of economic policy uncertainty (EPU) and geopolitical risk uncertainty (GPR) on economic growth. Increasing uncertainties in the global economy directly affect investment decisions, consumer confidence, and market stability. In the study, the effects of EPU and GPR on Gross Domestic Product (GDP) were analyzed using a panel data set for the period 2003-2021 for OECD countries. The analyses conducted with the Panel Vector Autoregression (PVAR) method reveal that economic policy uncertainty has a strong and statistically significant negative effect on economic growth. On the other hand, the effect of geopolitical risk uncertainty on economic growth was found to be more limited and short-term. The findings of the study show that policy makers should develop measures to reduce economic uncertainties and that predictable macroeconomic policies in particular play a critical role for sustainable growth.