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- Title
Measuring Economic Uncertainty and Its Effects.
- Authors
Moore, Angus
- Abstract
I construct a monthly index of economic uncertainty for Australia. Economic uncertainty rose to historically high levels during the financial crisis and remained elevated until late 2013. The index is: higher around recessions, elections, monetary policy surprises and some major events; tends to increase faster than it decreases; and is driven by both domestic and foreign factors. I use the index to assess how uncertainty affects the Australian economy. Consistent with the 'real options' channel of uncertainty, I find that it reduces investment and employment growth. Similarly, uncertainty raises the household saving ratio, consistent with the 'precautionary savings' channel.
- Subjects
AUSTRALIA; ECONOMIC uncertainty; ECONOMIC development; GLOBAL Financial Crisis, 2008-2009; MONETARY policy; ECONOMICS
- Publication
Economic Record, 2017, Vol 93, Issue 303, p550
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/1475-4932.12356