The Impact of Economic Policy Uncertainty on Firm Growth: Evidence from Türkiye
Chapter from the book: Ata, A. Y. (ed.) 2025. Economic Growth and Current Debates.

N. Barış Vardar
Altınbaş University
Mehtap Işık
Boğaziçi University
Gözde Erhan
Boğaziçi University
Atilla Çifter
Altınbaş University

Synopsis

This study explores the impact of economic policy uncertainty (EPU) on firm growth in the case of Türkiye. We utilize a quarterly panel dataset comprising 227 firms operating in Türkiye over the period 2010–2023. Firm growth is measured by the annual percentage change in net sales, which is the model’s dependent variable. In addition to the economic policy uncertainty index, the model includes both micro- and macroeconomic control variables, such as total asset growth, fixed asset growth, change in debt, GDP growth, export growth, and changes in loan interest rates. The fixed effects estimation method is employed for the analysis. The results indicate that EPU has a statistically significant and negative effect on firm growth, a finding that remains robust even when time fixed effects are included in the model. Furthermore, variables such as past performance, fixed asset growth, and GDP growth positively influence firm growth, whereas increases in loan interest rates have a negative impact. These findings suggest that EPU represents a substantial risk for firms in developing countries like Türkiye and highlight the need for predictable and stable economic policies from policymakers. This study contributes to the literature by providing detailed micro-level evidence on the consequences of EPU, using Türkiye as a case study.

How to cite this book

Vardar, N. B. & Işık, M. & Erhan, G. & Çifter, A. (2025). The Impact of Economic Policy Uncertainty on Firm Growth: Evidence from Türkiye. In: Ata, A. Y. (ed.), Economic Growth and Current Debates. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub786.c3299

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Published

June 26, 2025

DOI