Petr Sedlacek | University of Bonn

Recessions are times of high uncertainty. But does uncertainty cause downturns or vice versa? And what are the long-run aggregate effects of uncertainty fluctuations? Using a structural model of creative destruction, I argue that counter-cyclical uncertainty is partly an epiphenomenon of growth. Because of gradual technology adoption, expansions of the technological frontier widen the dispersion of firm-level productivity shocks, a popular measure of uncertainty. IĀ find support for these, and other, model predictions in the data. Implied growth-driven uncertainty displays recessionary spikes and accounts for about half of the observed uncertainty variation. Uncertainty in the Great Recession was not growth-driven.

About School Seminar Series

School of Economics seminars are the main academic seminar series held on a Friday. These seminars are presented by guest researchers and enable School of Economics academics to network with other academics from around Australia and internationally.


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