dc.contributor.author | BONCIANI, Dario | |
dc.contributor.author | OH, Joonseok | |
dc.date.accessioned | 2019-06-12T12:17:38Z | |
dc.date.available | 2019-06-12T12:17:38Z | |
dc.date.issued | 2019 | |
dc.identifier.issn | 0265-8003 | |
dc.identifier.uri | https://hdl.handle.net/1814/63246 | |
dc.description.abstract | This paper argues that shocks increasing macroeconomic uncertainty negatively affect economic activity not only in the short but also in the long run. In a sticky-price DSGE model with endogenous growth through investment in R&D, uncertainty shocks lead to a short-term fall in demand because of precautionary savings and rising markups. The decline in the utilised aggregate stock of R&D determines a fall in productivity, which causes a long-term decline in the main macroeconomic aggregates. When households feature Epstein-Zin preferences, they become averse to these long-term risks affecting their consumption process (long-run risk channel), which strongly exacerbates the precautionary savings motive and the overall negative effects of uncertainty shocks. | en |
dc.format.mimetype | application/pdf | en |
dc.language.iso | en | en |
dc.relation.ispartofseries | Bank of England Staff | en |
dc.relation.ispartofseries | Working Paper | en |
dc.relation.ispartofseries | 2019/802 | en |
dc.relation.isreplacedby | http://hdl.handle.net/1814/64465 | |
dc.relation.uri | https://www.bankofengland.co.uk/working-paper/2019/the-long-run-effects-of-uncertainty-shocks | |
dc.rights | info:eu-repo/semantics/openAccess | en |
dc.subject | Uncertainty shocks | en |
dc.subject | R&D | en |
dc.subject | Endogenous growth | en |
dc.subject | E32 | en |
dc.subject | O40 | en |
dc.title | The long-run effects of uncertainty shocks | en |
dc.type | Working Paper | en |