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Uncertainty and the geography of the great recession

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  • Shoag, Daniel
  • Veuger, Stan

Abstract

The variation in a state-level measure of local economic-policy uncertainty during the 2007–2009 recession matches the cross-sectional distribution of unemployment outcomes in this period. This relationship is robust to numerous controls for other determinants of labor market outcomes. Using preexisting state institutions that amplified uncertainty, we find evidence that this type of local uncertainty played a causal role in increasing unemployment. Together, these results suggest that increased uncertainty contributed to the severity of the Great Recession.

Suggested Citation

  • Shoag, Daniel & Veuger, Stan, 2016. "Uncertainty and the geography of the great recession," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 84-93.
  • Handle: RePEc:eee:moneco:v:84:y:2016:i:c:p:84-93
    DOI: 10.1016/j.jmoneco.2016.11.002
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    Cited by:

    1. Jeffrey Clemens, 2015. "The Minimum Wage and the Great Recession: Evidence from the Current Population Survey," NBER Working Papers 21830, National Bureau of Economic Research, Inc.
    2. Jeffrey Clemens & Stan Veuger, 2015. "Risks to the Returns to Medical Innovation: The Case of Myriad Genetics," NBER Working Papers 21469, National Bureau of Economic Research, Inc.
    3. repec:bla:coecpo:v:35:y:2017:i:2:p:345-357 is not listed on IDEAS
    4. Christou, Christina & Cunado, Juncal & Gupta, Rangan & Hassapis, Christis, 2017. "Economic policy uncertainty and stock market returns in PacificRim countries: Evidence based on a Bayesian panel VAR model," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 92-102.
    5. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1593-1636.
    6. repec:bla:obuest:v:79:y:2017:i:2:p:205-233 is not listed on IDEAS
    7. Clemens, Jeffrey & Wither, Michael, 2014. "Just the Facts: Demographic and Cross-Country Dimensions of the Employment Slump," MPRA Paper 60228, University Library of Munich, Germany.
    8. Goodness C. Aye & Rangan Gupta, 2018. "Macroeconomic Uncertainty and the Comovement in Buying versus Renting in the United States," Working Papers 201832, University of Pretoria, Department of Economics.
    9. DiMaggio, Marco & Kermani, Amir & Ramcharan, Rodney & Yu, Edison, 2017. "Household Credit and Local Economic Uncertainty," Working Papers 17-21, Federal Reserve Bank of Philadelphia.
    10. Mathy, Gabriel & Ziebarth, Nicolas L., 2017. "How Much Does Political Uncertainty Matter? The Case of Louisiana under Huey Long," The Journal of Economic History, Cambridge University Press, vol. 77(01), pages 90-126, March.
    11. Walid Bahloul & Mehmet Balcilar & Juncal Cunado & Rangan Gupta, 2017. "The Role of Economic and Financial Uncertainties in Predicting Commodity Futures Returns and Volatility: Evidence from a Nonparametric Causality-in-Quantiles Test," Working Papers 201725, University of Pretoria, Department of Economics.
    12. Chow Sheung-Chi & Cunado Juncal & Gupta Rangan & Wong Wing-Keung, 2018. "Causal relationships between economic policy uncertainty and housing market returns in China and India: evidence from linear and nonlinear panel and time series models," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 22(2), pages 1-15, April.
    13. Lucas F. Husted & John H. Rogers & Bo Sun, 2017. "Monetary Policy Uncertainty," International Finance Discussion Papers 1215, Board of Governors of the Federal Reserve System (U.S.).
    14. Gabriel Lee & Binh Nguyen Thanh & Johannes Strobel, 2017. "Effects of Macroeconomic Uncertainty and Labor Demand Shocks on the Housing Market," Working Papers 170, Bavarian Graduate Program in Economics (BGPE).

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