Uncertainty and Growth Disasters / Boyan Jovanovic, Sai Ma.

Format:

Book

Author/Creator:

Jovanovic, Boyan.

Contributor:

National Bureau of Economic Research.

Ma, Sai.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28024.

NBER working paper series no. w28024

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

This paper documents several facts on the real effects of economic uncertainty. First, higher uncertainty is associated with a more dispersed distribution of output growth. Second, the relation is highly asymmetric: A rise in uncertainty is associated with a sharp decline in the lower tail of the growth distribution whereas it has a much smaller and insignificant impact on its upper tail. Third, the negative response of growth to uncertainty shocks is larger when the equity market is more volatile. We build a model in which growth and uncertainty are both endogenous: rapid adoption of new technology raises economic uncertainty and may cause measured productivity to decline. The equilibrium growth distribution is negatively skewed and higher uncertainty leads to a thicker left tail and to more labor reallocation among jobs and among

Notes:

Print version record

October 2020.