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Uncertainty shocks in an intangible economy

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  • Zhang, Shuonan

Abstract

This paper studies uncertainty shocks in the context of an intangible economy. I build a two-sector dynamic stochastic general equilibrium (DSGE) model to understand a shift in investment composition and its implications for the transmission of uncertainty shocks. The model is motivated by the role of intangible capital as a cushion, mitigating the adverse effects of uncertainty on investment, as suggested by firm-level data. The quantitative analysis shows that heightened uncertainty directs resources toward the intangible sector, making the economy more intangible-intensive. The rising importance of intangibles diminishes aggregate volatility in the uncertainty-driven business cycle.

Suggested Citation

  • Zhang, Shuonan, 2026. "Uncertainty shocks in an intangible economy," Journal of Economic Dynamics and Control, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:dyncon:v:182:y:2026:i:c:s0165188925001964
    DOI: 10.1016/j.jedc.2025.105230
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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