Equity market uncertainty can reduce real GDP – researcher
Equity market volatility in Q4 2018 could reduce policy rate path by 50bp, says researcher
A temporary increase in equity market uncertainty could have persistent effects on the economy, a researcher from the US’s Federal Reserve Bank of Kansas City says in an economic letter.
Using historical data on equity market volatility, Brent Bundick estimates the longer-term effects of the increased uncertainty in US equity markets seen in the fourth quarter of last year. He uses the Chicago Board Options Exchange Volatility Index (Vix) as a measure of uncertainty.
During the fourth quarter
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