Really uncertain business cycles

Nicholas Bloom, Max Floetotto, Nir Jaimovich, Itay Saporta-Eksten and Stephen Terry
Authors registered in the RePEc Author Service: Max Flötotto ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We propose uncertainty shocks as a new shock that drives business cycles. First, we demonstrate that microeconomic uncertainty is robustly countercyclical, rising sharply during recessions, particularly during the Great Recession of 2007-2009. Second, we quantify the impact of time-varying uncertainty on the economy in a dynamic stochastic general equilibrium model with heterogeneous firms. We find that reasonably calibrated uncertainty shocks can explain drops and rebounds in GDP of around 3%. Moreover, we show that increased uncertainty alters the relative impact of government policies, making them initially less effective and then subsequently more effective.

JEL-codes: E3 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://eprints.lse.ac.uk/51526/ Open access version. (application/pdf)

Related works:
Journal Article: Really Uncertain Business Cycles (2018)
Working Paper: REALLY UNCERTAIN BUSINESS CYCLES (2014)
Working Paper: Really Uncertain Business Cycles (2013)
Working Paper: Really Uncertain Business Cycles (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:51526

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().