Haroon Mumtaz ,
Queen Mary University of London
December 25, 2017
We use variation in the effect of US-wide or global uncertainty on state-level uncertainty to identify the impact of this shock on real activity. We nd that increases in uncertainty do have an adverse impact on real income, employment and unemployment. Thus, uncertainty shocks can be a source of economic fluctuations.
J.E.L classification codes: C15,C32, E32
Keywords:Uncertainty shocks, Instrumental variables, US states