The economic effects of firm-level uncertainty: Evidence using subjective expectations

Giuseppe Fiori and Filippo Scoccianti

Journal of Monetary Economics, 2023, vol. 140, issue C, 92-105

Abstract: Using two decades of Italian survey data on business managers’ expectations we measure subjective firm-level uncertainty and quantify its economic effects. Firm-level uncertainty persists for a few years and varies across firms’ demographic characteristics. Uncertainty induces sizable and long-lasting economic effects over a broad array of real and financial variables only when driven by its downside component — that is, uncertainty about below-mean outcomes. Economy-wide uncertainty, constructed by aggregating firm-level uncertainty, is countercyclical but uncorrelated with typical proxies in the literature.

Keywords: Uncertainty; Business cycles; Investment; Expectations; Cash holdings; Downside uncertainty (search for similar items in EconPapers)
JEL-codes: D24 E22 E24 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The Economic Effects of Firm-Level Uncertainty: Evidence Using Subjective Expectations (2021)
Working Paper: The Economic Effects of Firm-Level Uncertainty: Evidence Using Subjective Expectations (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:140:y:2023:i:c:p:92-105

DOI: 10.1016/j.jmoneco.2023.08.004

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