Journal ArticleDOI
‘Wait-and-See’ business cycles?
Rüdiger Bachmann,Christian Bayer +1 more
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In this article, the authors use a heterogeneous-firm dynamic stochastic general equilibrium model, where firms face fixed capital adjustment costs and show that time-varying firm-level risk through "wait-and-see" dynamics is unlikely a major source of business cycle fluctuations.About:
This article is published in Journal of Monetary Economics.The article was published on 2013-09-01. It has received 284 citations till now. The article focuses on the topics: Physical capital & Fixed capital.read more
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Fluctuations in Uncertainty
TL;DR: This article found that both macro and micro uncertainty appears to rise sharply in recessions and the types of exogenous shocks like wars, financial panics and oil price jumps that cause recessions appear to directly increase uncertainty, and uncertainty also appears to endogenously rise further during recessions.
Journal ArticleDOI
Fluctuations in Uncertainty
TL;DR: The authors found that both macro and micro uncertainty appears to rise sharply in recessions and the types of exogenous shocks like wars, financial panics and oil price jumps that cause recessions appear to directly increase uncertainty, and uncertainty also appears to endogenously rise further during recessions.
ReportDOI
Uncertainty, Financial Frictions, and Investment Dynamics
TL;DR: In this paper, the authors analyzed the economic significance of the traditional "wait-and-see" effect of uncertainty shocks and pointed to financial distortions as the main mechanism through which fluctuations in uncertainty affect macroeconomic outcomes.
Journal ArticleDOI
Fiscal Volatility Shocks and Economic Activity
Jesús Fernández-Villaverde,Jesús Fernández-Villaverde,Pablo Guerrón-Quintana,Keith Kuester,Juan F Rubio-Ramirez +4 more
TL;DR: In this article, the effects of changes in uncertainty about future fiscal policy on aggregate economic activity were studied, and it was shown that fiscal volatility shocks have an adverse effect on economic activity that is comparable to the effect of a 25-basis-point innovation in the federal funds rate.
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Fiscal volatility shocks and economic activity
TL;DR: In this paper, the authors study how unexpected changes in uncertainty about fiscal policy affect economic activity and find that unexpected change in fiscal volatility shocks can have a sizable adverse effect on economic activity.
References
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Book
Investment Under Uncertainty
Avinash Dixit,Robert S. Pindyck +1 more
TL;DR: In this article, Dixit and Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made.
Journal ArticleDOI
Investment Under Uncertainty
TL;DR: This article defined investment as the act of incurring an immediate cost in the expectation of future rewards, i.e., the payments it must make to extract itself from contractual commitments, including severance payments to labor, are the initial expenditure, and the prospective reward is the reduction in future losses.
Posted Content
The Impact of Uncertainty Shocks
TL;DR: In this paper, a model with a time varying second moment is proposed to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment, which occurs because higher uncertainty causes firms to temporarily pause their investment and hiring.
Journal ArticleDOI
Irreversibility, Uncertainty, and Cyclical Investment
TL;DR: In this article, the authors build on the theory of irreversible choice under uncertainty to explain cyclical investment fluctuations and show that when individual projects are irreversible, agents must make investment timing decisions that trade off the extra returns from early commitment against the benefits of increased information gained by waiting.