Economic Policy Uncertainty in the 2020s: Measurement, Conditional Effects, and a Future Research Agenda

HRMARS - Economic policy uncertainty (EPU) has developed from a macro-level news index into a multilevel construct explaining heterogeneous corporate decisions, information environments, and market outcomes. This article critically integrates thirty-one peer-reviewed studies from 2020 to 2025, alongside four foundational contributions that delimit the construct and its core mechanisms. The review organizes contemporary evidence around three questions: how EPU is measured, through which mechanisms it affects firms, and why its consequences vary across settings. National news-based indices remain influential but are increasingly complemented by local, policy-specific, survey-based, and firm-level textual measures. Across investment, financing, innovation, and disclosure, the dominant pattern is conditional: real-options delay and financing frictions produce contraction, while precautionary liquidity, accelerated innovation, and timely disclosure reflect adaptive responses under specific governance and institutional conditions. An integrated framework is advanced in which measured uncertainty operates through managerial perception and is moderated by firm resources, industry irreversibility, and political-institutional context. A research agenda is proposed for firm-level and LLM-enabled measurement, multilevel causal designs, and strategic resilience, with particular attention to financial statement comparability as a mechanism linking policy uncertainty, strategic differentiation, and reporting credibility.