Michael Bordo, Andrew Levin, Mickey Levy, Arunima Sinha, 27 January 2021

COVID-19 has led to an unprecedented level of economic uncertainty, which remains elevated even to this day. Given the substantial dispersion in forecasts, this column underscores the rationale for central banks to incorporate scenario analysis into their policy deliberations and communications. To show the practicality of this approach, it describes three illustrative scenarios formulated last spring to span the range of plausible outcomes for the US economy at that time. 

Scott Baker, Aniket Baksy, Nicholas Bloom, Steven Davis, Jonathan Rodden, 22 December 2020

Elections can cause economic uncertainty, especially when elections take place in a politically polarised context. This column studies how national election cycles in 23 countries influence economic policy uncertainty, as measured by the share of newspaper articles that discusses uncertainty and economic policy. Economic policy uncertainty clearly rises in the months leading up to national elections. Average economic policy uncertainty values are 13% higher in the month before and the month of national elections than in other months during the same election cycle. In the US, economic policy uncertainty increases are especially pronounced around close and highly polarised presidential elections. 

David E. Altig, Scott Baker, Jose Maria Barrero, Nicholas Bloom, Philip Bunn, Scarlet Chen, Steven Davis, Julia Leather, Brent Meyer, Emil Mihaylov, Paul Mizen, Nicholas Parker, Thomas Renault, Pawel Smietanka, Gregory Thwaites, 24 July 2020

Measures of economic uncertainty derived from statistical models are not well suited to quickly capture shifts associated with sudden, surprise developments like the COVID-19 crisis, thus necessitating forward-looking measures. This column considers several such forward-looking indicators of economic uncertainty for the US and UK before and during the COVID-19 pandemic. All indicators show huge jumps in uncertainty in reaction to the pandemic and its economic fallout. Most indicators reach their highest values on record, but the extent of increases and time paths differ.

Bastien Chabé-Ferret, Paula Gobbi, 26 January 2019

Between the early 1940s and the late 1960s, the secular decline in fertility that started at the turn of the 19th century in most developed countries was interrupted by a massive baby-boom. This column argues that although much attention has focused on this boom, fertility rates preceding it were abnormally low. The evidence suggests that economic uncertainty can explain a substantial part of the major swings in fertility over the 20th century.

M. Ayhan Kose, Marco Terrones, 18 October 2012

Bouts of elevated uncertainty have been one of the defining features of the sluggish recovery from the global financial crisis. This column explores the role of uncertainty in driving macroeconomic outcomes using data from a large group of advanced countries over the past 40 years. It concludes that uncertainty appears to hinder growth.

Nicholas Bloom, Max Floetotto, 12 January 2009

A key source of the today’s economic weakness is uncertainty that led firms to postpone investment and hiring decisions. This column, by the authors whose model forecast the recession as far back as June 2008, report that the key measures of uncertainty have dropped so rapidly that they believe growth will resume by mid-2009. This means any additional economic stimulus has to be enacted quickly. Delaying to the summer may mean the economic medicine is administered just as the patient is leave the hospital.

Events

CEPR Policy Research