‘Uncertainty shocks’ can do long-term harm – BoE paper
Authors outline a general equilibrium model to show uncertainty can have long-run effects
“Uncertainty shocks” cause damage to the economy not just in the short term but potentially for as long as 10 years, new research published by the Bank of England finds.
Dario Bonciani and Joonseok Jason Oh present empirical results that suggest uncertainty shocks in the US have “significant” negative effects on the “main macroeconomic aggregates” and on productivity that last for 40 quarters.
In the paper, The long-run effects of uncertainty shocks, they go on to “rationalise” the empirical
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