John Cochrane says: "John Taylor, Stanford's Nick Bloom and Chicago Booth's Steve Davis see the uncertainty induced by seat-of-the-pants policy at fault. Who wants to hire, lend or invest when the next stroke of the presidential pen or Justice Department witch hunt can undo all the hard work? Ed Prescott emphasizes large distorting taxes and intrusive regulations. The University of Chicago's Casey Mulligan deconstructs the unintended disincentives of social programs. And so forth. These problems did not cause the recession. But they are worse now, and they can impede recovery and retard growth."
OK. Let's assume that increased political uncertainty caused a reduction in willingness to "hire, lend, or invest". That sounds plausible to me. The sign is right, but I don't know about the magnitude.
A monetarist would say that would increase the demand for money, and that would cause a recession, unless the central bank took sufficient offsetting action.
A New Keynesian/Neo Wicksellian would say that would reduce the natural rate of interest, and that would cause a recession, unless the central bank took sufficient offsetting action.
Increased political uncertainty would reduce aggregate demand. Plus, positive feedback processes could amplify that initial reduction in aggregate demand. Even those who were not directly affected by that increased political uncertainty would reduce their own willingness to hire lend or invest because of that initial reduction in aggregate demand, plus their own uncertainty about aggregate demand. So the average person or firm might respond to a survey by saying that insufficient demand was the problem in their particular case, and not the political uncertainty which caused it.
But the demand-side problem could still be prevented by an appropriate monetary policy response. Sure, there would be supply-side effects too. And it would be very hard empirically to estimate the relative magnitudes of those demand-side vs supply-side effects. Looking (as Noah suggests) at whether inflation falls (demand-side) or rises (supply-side) might not tell us the whole story. Because anything which causes shocks to relative prices can, with nominal rigidities, shift the Short Run Phillips Curve adversely more than it shifts the Long Run Phillips Curve adversely, so keeping the economy on the LRPC might require a temporary increase in inflation. (We saw this for example in Canada when the GST (VAT) was introduced to replace a less efficient tax, and we see it whenever the relative price of oil rises.)
So it's not just an either/or thing. Nor is it even a bit-of-one-plus-bit-of-the-other thing. Increased political uncertainty can cause a recession via its effect on demand. Unless monetary policy responds appropriately. (And that, of course, would mean targeting NGDP, because inflation targeting doesn't work when supply-side shocks cause adverse shifts in the Short Run Phillips Curve.)