The Effect of Macroeconomic Uncertainty on Firm Decisions

Saten Kumar, Yuriy Gorodnichenko and Olivier Coibion

No 30288, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a new survey of firms in New Zealand, we document how exogenous variation in the macroeconomic uncertainty perceived by firms affects their economic decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some firms. The effects on their decisions relative to their initial plans as well as relative to an untreated control group are measured in a follow-up survey six months later. We find that as firms become more uncertain, they reduce their prices, employment, and investment, their sales decline, and they become less likely to invest in new technologies or open new facilities. These ex-post effects of uncertainty are similar to how firms say they would respond to higher uncertainty when asked hypothetical questions.

JEL-codes: E2 E30 E7 (search for similar items in EconPapers)
Date: 2022-07
Note: EFG ME
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Published as Saten Kumar & Yuriy Gorodnichenko & Olivier Coibion, 2023. "The Effect of Macroeconomic Uncertainty on Firm Decisions," Econometrica, Econometric Society, vol. 91(4), pages 1297-1332, July.

Downloads: (external link)
http://www.nber.org/papers/w30288.pdf (application/pdf)

Related works:
Journal Article: The Effect of Macroeconomic Uncertainty on Firm Decisions (2023)
Working Paper: The Effect of Macroeconomic Uncertainty on Firm Decisions (2022)
Working Paper: The Effect of Macroeconomic Uncertainty on Firm Decisions (2022)
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:nbr:nberwo:30288

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30288

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().