POLICY UNCERTAINTY AND ITS IMPACT ON ECONOMIC GROWTH

Nowadays, many experts are wondering why the European economy has not been able to cope with the recession that began in 2007 in the United States and subsequently spilled over to Europe. Despite initial optimistic expectations there has so far been no significant economic growth, which would give a clear signal that the economic crisis is over. Recently, there have been increasing opinions that the main cause is poorly set economic policy, which is too focused on fiscal discipline, thereby limiting investments that would kick-start the economy of the European Union. According to some authors, however, Economic Policy Uncertainty, which has a negative influence economic growth, also plays an important part. The aim of this paper is to use panel regression to prove or disprove this hypothesis on the example of 5 largest European economies. The analyses suggest that statistically significant negative effect of economic policy uncertainty on economic growth was demonstrated in 2000-2012 in the developed EU economies, which corresponds to the results of analyses carried out by the authors for the United States.