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Considering the increasing exposure of firms to global policy shocks, this paper study the bilateral trade adjustments to the increases in economic policy uncertainty (EPU) of 126 countries over the period 1996-2014. We employ a gravity model and a robust Poisson Pseudo Maximum Likelihood (PPML) estimator that mitigates the problem of heteroscedasticity and zero trade flows. The results show that large variations in bilateral trade can be explained by the changes in economic policy uncertainty. Whereas heightened EPU from partner countries has a positive spillover effect on imports to the reporting country, we find a negative and statistically significant effect of domestic EPU on exports.

Using an Autoregressive Distributed Lag (ARDL) technique, and the Granger causality test, this paper examines the dynamic relationship between economic growth, the size of the informal economy, and trade openness in Ghana. Our results provide evidence of a positive and bidirectional causality between the size of the informal economy and economic growth. Moreover, we find that openness to trade has a significant causal effect on the prevalence of informal activities and economic growth.I would like to thank all the Editor and all the anonymous reviewers for their time and constructive comments. Lastly, I would like to thank Mrs. Amandine Ribot for her assistance and support during the preparation of this manuscript.

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