Search Results
Working Paper
Uncertainty and Growth Disasters
This paper documents several stylized facts on the real effects of economic uncertainty. First, higher uncertainty is associated with a more dispersed and negatively skewed distribution of output growth. Second, the response of economic growth to an increase in uncertainty is highly nonlinear and asymmetric. Third, higher asset volatility magnifies the negative impact of uncertainty on growth. We develop and estimate an analytically tractable model in which rapid adoption of new technology may raise economic uncertainty which causes measured productivity to decline. The equilibrium growth ...
Discussion Paper
Downside and Upside Economic Uncertainty
Over the last year, many forecasts have called out a slowdown in the U.S. economy driven mainly by heightened trade and geopolitical tensions. Instead, growth in the United States has remained quite solid. Real U.S. gross domestic product (GDP) grew at a strong annual rate of 3.8 percent in the second quarter of 2025.
Discussion Paper
Global Real Economic Uncertainty and COVID-19
The COVID-19 pandemic led to unprecedented disruptions in supply, demand, and productivity, which have had cataclysmic health, social, and economic implications across the globe. In this note, we explore the large increase in global real economic uncertainty observed during the pandemic as a channel that explains or magnifies the economic implications of COVID-19
Working Paper
The Global Transmission of Real Economic Uncertainty
Using a sample of 30 countries representing about 65% of the global GDP, we find that real economic uncertainty (REU) has negative long-lasting domestic economic effects and transmits across countries. The international spillover effects of REU are (i) additional to those of domestic REUs, (ii) statistically significant, and (iii) economically meaningful. Trade ties play a key role in explaining why uncertainty generated in one country can affect economic outcomes in other countries. Based on this evidence, we construct a novel index for global REU as the trade-weighted average of all ...
Discussion Paper
The Global Transmission of Inflation Uncertainty
The COVID-19 pandemic brought unprecedented disruptions to global supply chains, labor markets, and economic activity, leading to significant volatility in inflation rates worldwide. Not only the level of inflation but the uncertainty about the future path of inflation increased considerably since the onset of the pandemic and have remained elevated until very recently, posing challenges for policymakers and businesses alike. Figure 1 shows a measure of inflation uncertainty proposed in a recent paper by Londono, Ma and Wilson (2024) (LMW hereafter). The intuition behind this measure is that ...
Discussion Paper
Global Inflation Uncertainty and its Economic Effects
Policymakers, including Federal Open Market Committee (FOMC) participants, have been stressing the elevated level of uncertainty, especially related to inflation, and the challenge this poses for monetary policy. As seen in Figure 1, with few exceptions, FOMC participants see the level of uncertainty around their forecasts for core PCE inflation as high, compared to the average over the past 20 years.