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Measuring Uncertainty

Author

Listed:
  • Boragan Aruoba

    (University of Maryland)

  • Dun Jia

    (Renmin University of China)

  • Felipe Saffie

    (University of Maryland)

Abstract

This paper distinguishes three concepts that are usually commonly referred as uncertainty: i) real uncertainty or the increase in dispersion of productivity, ii) informational uncertainty or the decrease in the precision of a common signal, and iii) disagreement or the decrease in the precision of idiosyncratic signals of rms. A simple dynamic labor search model is used to analytically show that these concepts have dierent implications for aggregate outcomes and for the distributio of rm-level outcomes. These dierences are used in a DSGE labor-search model to identify and quantify each form of uncertainty in the United States over the last 30 years.

Suggested Citation

  • Boragan Aruoba & Dun Jia & Felipe Saffie, 2018. "Measuring Uncertainty," 2018 Meeting Papers 490, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:490
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    References listed on IDEAS

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