Recent events suggest that uncertainty changes play a major role in U.S. labor market fluctuations. This study analyzes the impact of uncertainty shocks on unemployment dynamics. Using a vector autoregression approach, we show that uncertainty shocks measured by stock market volatility have a...

We show that time-varying risk premium in financial markets can explain a key yet puzzling feature of labor markets: the large differences in unemployment risk across worker age-groups over the business cycle. Our search model features a time-varying risk premium and learning about unobserved...

In this paper, we characterize and empirically implement robust normative criteria for comparing societies on the basis of their allocations of risks among their members. Risks are modelled as lotteries on the set of distributions of state-contingent pecuniary consequences. Individuals are...

This paper develops a forward-looking indicator for macroeconomic uncertainty that employers are confronted with when they take decisions about the size of their workforce. The model that provides the basis for this uncertainty indicator interprets hires and lay-off s of workers as an investment...

Uncertainty shocks are found to adversely affect labor market outcomes. Most studies attribute labor adjustments costs for the propagation of macroeconomic uncertainty to the labor market. Given that large establishments in Germany face higher labor adjustments cost, they should be affected more...

A crucial but often ignored element of inflation expectations is the amount of perceived inflation risk. This paper estimates the degree of uncertainty and asymmetry in the probability forecasts of the Survey of Professional Forecasters (SPF) using a new methodology. The main conclusion from our...

This paper uses survey data to create a model of carbon risk (the financial risk associated with CO2 emissions under uncertain climate change policy). The usual way to incorporate the notion of carbon risk into investment decision making is to include a cost of carbon in the budget analysis....

Abel (2002) shows that pessimism and doubt in the subjective distribution of the growth rate of consumption reduce the equity premium puzzle. We quantify the amount of pessimism and doubt in survey data on US consumption and income. Individual forecasters are in fact pessimistic, but show marked...