Growth-at-Risk is Investment-at-Risk
Abstract: We investigate the role financial conditions play in the composition of U.S. growth-at-risk. We document that, by a wide margin, growth-at-risk is investment-at-risk. That is, if financial conditions indicate U.S. real GDP growth will be in the lower tail of its conditional distribution, we know that the main contributor is a decline in investment. Consumption contributes under extreme financial stress. Government spending and net exports do not play a role.
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Description: Full text
Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2023-08-21