I investigate the argument that, in a twoparty system with different regulatory objectives, political uncertainty generates regulatory risk. I show that this risk has a fluctuation effect that hurts both parties and an outputexpansion effect that benefits one party. Consequently, at least one...

This paper investigates political uncertainty as a source of regulatory risk. It shows that political parties have incentives to reduce regulatory risk actively: Mutually beneficial pre-electoral agreements that reduce regulatory risk always exist. Agreements that fully eliminate it exist when...

Deviations from a policy rule underpin empirical identification of monetary policy shocks. We cast light on how deviations arise by analyzing internal policy deliberations of the Federal Open Market Committee (FOMC). We show that policymakers’ beliefs about higher-order moments of economic...