(Business Wire)  On April 7 and 8, the Becker Friedman Institute for Research in Economics and the Urban Institute will gather top economists, policymakers, and analysts in Washington D.C. to explore the economic impact of policy uncertainty.

The expiration of Bush-era tax cuts, the debt ceiling showdowns, the policy response to the bankruptcy of Lehman Brothers–all moments of doubt about future taxes, deficits, and growth–hold potentially huge implications for the domestic economy, financial markets, and international trade. The conference “Exploring the Price of Policy Uncertainty” will examine the evidence on the costs of uncertainty and the challenges of measuring them.

Lars Peter Hansen, recipient of the 2013 Nobel Prize in Economic Sciences, and Steven J. Davis, the William H. Abbott Professor of International Business and Economics at the University of Chicago Booth School of Business, organized the event.

Presenters include:

• Kevin Hassett (American Enterprise Institute) and Gilbert Metcalfe (Tufts University) on “Tax Policy Uncertainty and the Economy: A Review of the Literature”
• Nolan McCarty (Princeton University) on “The Decline of Regular Order in Appropriations: Does It Matter?”
• Ked Hogan (BlackRock Global Market Strategies Group) on “Policy Uncertainty and Asset Markets”
• Simon Gilchrist (Boston University) on “Uncertainty, Financial Frictions, and Investment Dynamics”
• Stan Veuger (American Enterprise Institute) on “Uncertainty and the Geography of the Great Recession”
• Kyle Handley (University of Michigan) and Nuno Limão (University of Maryland) on “Policy Uncertainty, Trade and Welfare: Theory and Evidence for China and the U.S.”

The event’s co-organizers are renowned for their research examining the impact of uncertainty on the real economy. Lars Peter Hansen has been recognized for making fundamental advances in our understanding of how economic agents cope with changing and risky environments. Steve Davis created the Economic Policy Uncertainty Index, a novel benchmark of policy uncertainty measured by newspaper content. It allows analysis of economic outcomes in times of high policy uncertainty.

“Many economists–perhaps many policy makers as well–have some sense that unnecessarily injecting uncertainty into the economic environment is an undesirable thing,” says Steve Davis. “But the question is: how much weight do you place on it? How much does it matter? Research on that is still playing out.”

“Too often in policy we appeal to really confident statements and overstate what we know,” says Lars Peter Hansen, Becker Friedman Institute Director. “This conference is a step toward acknowledging what we don’t know about how shifting policy and economic outcomes are linked. It will generate discussions that begin to answer some of those questions,” says Hansen.

The conference is part of a broader research initiative into the effects and costs of policy uncertainty, generously sponsored by the MacArthur Foundation. The initiative includes a video series delving into the ways that policy uncertainty and its costs might affect our lives and the first video in that series features the work of Davis.

“Trying to build a solid scientific basis of understanding in this area will eventually be reflected in the form of better policy and better outcomes for all of us,” says Davis.

Media are invited to attend and should contact [email protected] to RSVP. Interviews with the organizers on uncertainty may be arranged. More background on the conference is available here: http://bit.ly/1Ew5Eyn

About the Becker Friedman Institute

The Gary Becker Milton Friedman Institute for Research in Economics advances inquiry that illuminates our choices, our economy, our society, and our future. It supports research initiatives touching on key economic and policy questions.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector.

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