This paper shows that, with (partial) irreversibility, higher uncertainty reduces the impact effect of demand shocks on … investment. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed … both numerically for a model with a rich mix of adjustment costs, time-varying uncertainty, and aggregation over investment …

Uncertainty appears to vary strongly over time, temporarily rising by up to 200% around major shocks like the Cuban … Missile crisis, the assassination of JFK and 9/11. This paper offers the first structural framework to analyze uncertainty …. The parameterized model is then used to simulate a macro uncertainty shock, which produces a rapid drop and rebound in …

ideological divide, the US seems destined to heightened levels of policy uncertainty for many years to come. Some research … suggests that such uncertainty, particularly over economic policy, partly explains the sluggish nature of the recovery in … America – and - according to one recent study, restoring policy uncertainty to levels that prevailed before the financial …

Uncertainty varies strongly over time, rising by 50% to 100% in recessions and by up to 200% after major economic and … political shocks. This paper shows that higher uncertainty reduces the responsiveness of R&D to changes in business conditions … - a “caution-effect” - making it more persistent over time. Thus, uncertainty will play a critical role in shaping the …