Uncertainty, unemployment, and inflation
AbstractHeightened uncertainty acts like a decline in aggregate demand because it depresses economic activity and holds down inflation. Policymakers typically try to counter uncertainty's economic effects by easing the stance of monetary policy. But, in the recent recession and recovery, nominal interest rates have been near zero and couldn't be lowered further. Consequently, uncertainty has reduced economic activity more than in previous recessions. Higher uncertainty is estimated to have lifted the U.S. unemployment rate by at least one percentage point since early 2008.
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Bibliographic InfoArticle provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.
Volume (Year): (2012)
Issue (Month): sep17 ()
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sylvain Leduc & Zheng Liu, 2012.
"Uncertainty shocks are aggregate demand shocks,"
Working Paper Series, Federal Reserve Bank of San Francisco
2012-10, Federal Reserve Bank of San Francisco.
- Zheng Liu & Sylvain Leduc, 2013. "Uncertainty Shocks Are Aggregate Demand Shocks," 2013 Meeting Papers, Society for Economic Dynamics 270, Society for Economic Dynamics.
- Gabriel P. Mathy & Nicholas L. Ziebarth, 2014. "How Much Does Political Uncertainty Matter? The Case of Louisiana Under Huey Long," Working Papers, American University, Department of Economics 2014-06, American University, Department of Economics.
- John C. Williams, 2013. "The economy and monetary policy in uncertain times," Speech, Federal Reserve Bank of San Francisco 115, Federal Reserve Bank of San Francisco.
- Maritta Paloviita & Matti Viren, 2014. "Inflation and output growth uncertainty in individual survey expectations," Empirica, Springer, Springer, vol. 41(1), pages 69-81, February.
- repec:fip:fedfsp:y:2013:i:jan.14 is not listed on IDEAS
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