IESET.
Hypotheses·institutional quality·policy_uncertainty_private_investment

Across a broad panel of economies 1990-2020, higher policy uncertainty — measured by economic-policy-uncertainty (EPU) indices, election-frequency volatility, and regulatory-turnover rates — predicts lower private-investment shares of GDP and slower long-run total-factor-productivity growth in the years following state-led reform shifts.

The pre-registered claim is that a one-standard-deviation increase in policy uncertainty is associated with at least a 1.5-percentage-point reduction in private investment as a share of GDP and at least a 0.2- percentage-point reduction in annual TFP growth over the subsequent 5 years, after controlling for initial income, financial conditions, and country fixed effects.

INCONCLUSIVEengine/runs/policy_uncertainty_private_investment

INCONCLUSIVE_DATA_PENDING — interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

This test cannot make a firm call yet. interaction term requested but no loadable constructed interaction variable is defined.

why it matters

This matters because institutional quality claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 55 country or place units from 1990 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Policy uncertainty index
  • Epu index
What we checked
  • Private investment share income
  • Productivity growth 5yr
  • Business investment share income
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/policy_uncertainty_private_investment
1007550250199020052020USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show private_investment_share_gdp across 55 sampled countries over 1990–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for policy_uncertainty_private_investment. Published chart will be generated from engine/runs/policy_uncertainty_private_investment/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:53:23Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Across a broad panel of economies 1990-2020, higher policy uncertainty — measured by economic-policy-uncertainty (EPU) indices, election-frequency volatility, and regulatory-turnover rates — predicts lower private-investment shares of GDP and slower long-run total-factor-productivity growth in the years following state-led reform shifts. The pre-registered claim is that a one-standard-deviation increase in policy uncertainty is associated with at least a 1.5-percentage-point reduction in private investment as a share of GDP and at least a 0.2- percentage-point reduction in annual TFP growth over the subsequent 5 years, after controlling for initial income, financial conditions, and country fixed effects.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) the coefficient on policy uncertainty is not negative and significant at p<0.05 on private investment, OR (b) the coefficient is not negative and significant at p<0.05 on TFP growth, OR (c) the implied effect of a one-SD uncertainty increase on private investment is below 0.75 pp of GDP. A "uncertainty is good for investment" reading wins if coefficients are positive (some theories predict that uncertainty raises the option value of investing in flexible technologies).

formal test & threshold
test:      panel_fe_policy_uncertainty_on_private_investment_and_tfp
threshold: panel_FE_beta(uncertainty → private_investment_share) < 0 at p<0.05 AND panel_FE_beta(uncertainty → tfp_growth_5yr) < 0 at p<0.05 AND implied_effect_per_1sd_uncertainty_on_investment >= 0.75 pp_of_gdp

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
55 countries · 1990 – 2020
Evidence type
associational

Panel FE with 5-year forward-differenced outcomes on policy- uncertainty index. Interaction: uncertainty × reform-shift indicator. Event-study around major reform shifts (e.g. Argentina 2001 corralito, India 1991, Brazil 1990 Collor plan) with uncertainty as moderator. Robustness: use only EPU-available countries; exclude election years; control for stock-market volatility as alternative uncertainty proxy.

Data

VariableSourceTransform
private_investment_share_gdp
outcome
world_bank_wdi:NE.GDI.FTOT.ZStier 2
derived
tfp_growth_5yr
outcome
pwt:rtfpnatier 3
log_diff_5yr
business_investment_share_gdp
outcome
oecd:national_accounts_business_investmenttier 2
level
policy_uncertainty_index
treatment
constructed:0.5×epu:national_index + 0.3×election_frequency_volatility + 0.2×regulatory_turnover_ratetier 5
level
epu_index
treatment
academic:baker_bloom_davis_eputier 4
level
state_led_reform_shift_indicator
treatment
constructed:indicator = 1 for large_state_intervention_episodestier 5
indicator
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
real_interest_rate
control
world_bank_wdi:FR.INR.RINRtier 2
level
credit_to_private_sector
control
world_bank_wdi:FS.AST.PRVT.GD.ZStier 2
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
government_consumption_share
control
world_bank_wdi:NE.CON.GOVT.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — policy_uncertainty_private_investment

Verdict: INCONCLUSIVE_DATA_PENDING — interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

Pre-registration

  • Claim: Across a broad panel of economies 1990-2020, higher policy uncertainty — measured by economic-policy-uncertainty (EPU) indices, election-frequency volatility, and regulatory-turnover rates — predicts lower private-investment shares of GDP and slower long-run total-factor-productivity growth in the years following state-led reform shifts. The pre-registered claim is that a one-standard-deviation increase in policy uncertainty is associated with at least a 1.5-percentage-point reduction in private investment as a share of GDP and at least a 0.2- percentage-point reduction in annual TFP growth over the subsequent 5 years, after controlling for initial income, financial conditions, and country fixed effects.
  • Falsification rule: Not supported if (a) the coefficient on policy uncertainty is not negative and significant at p<0.05 on private investment, OR (b) the coefficient is not negative and significant at p<0.05 on TFP growth, OR (c) the implied effect of a one-SD uncertainty increase on private investment is below 0.75 pp of GDP. A "uncertainty is good for investment" reading wins if coefficients are positive (some theories predict that uncertainty raises the option value of investing in flexible technologies).
  • Falsification test: panel_fe_policy_uncertainty_on_private_investment_and_tfp

Estimate

  • Error: interaction term requested but no loadable constructed interaction variable is defined. The generic panel_fe runner would otherwise grade a main-effect coefficient instead of the pre-registered interaction estimand. Add a treatment or decomposition variable with transformation/source/name marking the interaction, or use a bespoke replication script.

Variables resolved

  • world_bank_wdi:NE.GDI.FTOT.ZS → private_investment_share_gdp (outcome, publisher=world_bank_wdi, n=9870)
  • pwt:rtfpna → tfp_growth_5yr (outcome, publisher=pwt, n=6407)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:FR.INR.RINR → real_interest_rate (controls, publisher=world_bank_wdi, n=4694)
  • world_bank_wdi:FS.AST.PRVT.GD.ZS → credit_to_private_sector (controls, publisher=world_bank_wdi, n=9562)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:NE.CON.GOVT.ZS → government_consumption_share (controls, publisher=world_bank_wdi, n=9133)

Variables missing data

  • oecd:national_accounts_business_investment (outcome, name=business_investment_share_gdp) — vintage not on disk
  • constructed: 0.5×epu:national_index + 0.3×election_frequency_volatility + 0.2×regulatory_turnover_rate (treatment, name=policy_uncertainty_index) — vintage not on disk
  • academic:baker_bloom_davis_epu (treatment, name=epu_index) — vintage not on disk
  • constructed: indicator = 1 for large_state_intervention_episodes (treatment, name=state_led_reform_shift_indicator) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:23+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

EPU indices are available for ~30 major economies. For the remaining countries, the composite relies on electoral-calendar volatility and regulatory-turnover proxies, which are lower quality. This is flagged as a measurement limitation.

Authored framework. Read the transparency note.