react in opposite directions to a shock to the real economy, and the response of inflation to uncertainty shocks vary across …

activity to a financial uncertainty shock during the great recession. We replicate this evidence with an estimated DSGE … real activity of an uncertainty shock under different Taylor rules estimated with normal times vs. great recession data … (the latter associated with a stronger response to output). We find that the uncertainty shock-induced output loss …

following a large real (non-financial) shock; and (ii) demonstrate the effectiveness of Large Scale Asset Purchases (LSAPs) in … addressing these contractions. The key mechanism stems from heterogeneous risk tolerance: as a recessionary shock hits the … Covid-19 shock and the large response by all the major central banks provide a vivid illustration of the environment we seek …