Navigation auf zora.uzh.ch

Search ZORA

ZORA (Zurich Open Repository and Archive)

Really uncertain business cycles

Bloom, Nicholas; Floetotto, Max; Jaimovich, Nir; Saporta-Eksten, Itay; Terry, Stephen J (2018). Really uncertain business cycles. Econometrica, 86(3):1031-1065.

Abstract

We investigate the role of uncertainty in business cycles. First, we demonstrate that microeconomic uncertainty rises sharply during recessions, including during the Great Recession of 2007–2009. Second, we show that uncertainty shocks can generate drops in gross domestic product of around 2.5% in a dynamic stochastic general equilibrium model with heterogeneous firms. However, we also find that uncertainty shocks need to be supplemented by first‐moment shocks to fit consumption over the cycle. So our data and simulations suggest recessions are best modelled as being driven by shocks with a negative first moment and a positive second moment. Finally, we show that increased uncertainty can make first‐moment policies, like wage subsidies, temporarily less effective because firms become more cautious in responding to price changes.

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Uncontrolled Keywords:Uncertainty, adjustment costs, business cycles
Scope:Discipline-based scholarship (basic research)
Language:English
Date:May 2018
Deposited On:12 Jun 2018 11:38
Last Modified:18 Jan 2025 02:40
Publisher:Econometric Society
ISSN:0012-9682
OA Status:Green
Free access at:Publisher DOI. An embargo period may apply.
Publisher DOI:https://doi.org/10.3982/ECTA10927
Official URL:https://onlinelibrary.wiley.com/doi/abs/10.3982/ECTA10927
Other Identification Number:merlin-id:16434
Download PDF  'Really uncertain business cycles'.
Preview
  • Content: Published Version

Metadata Export

Statistics

Citations

Dimensions.ai Metrics
487 citations in Web of Science®
507 citations in Scopus®
Google Scholar™

Altmetrics

Downloads

171 downloads since deposited on 12 Jun 2018
13 downloads since 12 months
Detailed statistics

Authors, Affiliations, Collaborations

Similar Publications