TY  - JOUR
AU  - Bachmann,Ruediger
AU  - Elstner,Steffen
AU  - Sims,Eric R.
TI  - Uncertainty and Economic Activity: Evidence from Business Survey Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16143
PY  - 2010
Y2  - June 2010
DO  - 10.3386/w16143
UR  - http://www.nber.org/papers/w16143
L1  - http://www.nber.org/papers/w16143.pdf
N1  - Author contact info:
Ruediger Bachmann
Department of Economics
RWTH Aachen University
Templergraben 64
Aachen
Germany
Tel: +49 (241) 80-96203
E-Mail: bachmann@safe.uni-frankfurt.de

Steffen Elstner
German Council of Economic Experts
Statistisches Bundesamt
65180 Wiesbaden
Germany
E-Mail: steffen.elstner@destatis.de

Eric R. Sims
Department of Economics
University of Notre Dame
723 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6309
Fax: 574/631-4783
E-Mail: esims1@nd.edu
M2  - featured in NBER digest on 2010-11-01
AB  - What is the impact of time-varying business uncertainty on economic activity? Using partly confidential business survey data from the U.S. and Germany in structural VARs, we find that positive innovations to business uncertainty lead to prolonged declines in economic activity. In contrast, their high-frequency impact is small. We find no evidence of the "wait-and-see"-effect – large declines of economic activity on impact and subsequent fast rebounds – that the recent literature associates with positive uncertainty shocks. Rather, positive innovations to business uncertainty have effects similar to negative business confidence innovations. Once we control for their low-frequency effect, we find little statistically or economically significant impact of uncertainty innovations on activity. We argue that high uncertainty events are a mere epiphenomenon of bad economic times: recessions breed uncertainty.
ER  -