Uncertainty Shocks in a Model of Effective Demand: Reply
Susanto Basu () and
Brent Bundick ()
No RWP 18-5, Research Working Paper from Federal Reserve Bank of Kansas City
de Groot, Richter, and Throckmorton (2018) argue that the model in Basu and Bundick (2017) can match the empirical evidence only because the model assumes an asymptote in the economy?s response to an uncertainty shock. In this Reply, we provide new results showing that our model?s ability to match the data does not rely either on assuming preferences that imply an asymptote nor on a particular value of the intertemporal elasticity of substitution. We demonstrate that shifting to preferences that are not vulnerable to the Comment?s critique does not change our previous conclusions about the propagation of uncertainty shocks to macroeconomic outcomes.
Keywords: Uncertainty shocks; Monetary policy; Sticky-price models (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
Pages: 6 pages
New Economics Papers: this item is included in nep-dge and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://www.kansascityfed.org/documents/4034/pdf-U ... 0Demand:%20Reply.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden
Journal Article: Uncertainty Shocks in a Model of Effective Demand: Reply (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fedkrw:rwp18-05
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Research Working Paper from Federal Reserve Bank of Kansas City Contact information at EDIRC.
Bibliographic data for series maintained by ().