본문 내용으로 건더뛰기

모바일 대메뉴명

KDI 경제정보센터

KDI 경제정보센터의 다양한
경제정책정보를 만나 보세요.

국제금융

Uncertainty, Wages, and the Business Cycle
CEPR 2020.07.15 원문보기
We show that occasional deviations from efficient wage setting generate strong and state-dependent amplification of uncertainty shocks and can explain the cyclical behavior of empirical measures of uncertainty. Central to our analysis is the existence of matching frictions in the labor market and an occasionally binding constraint on downward wage adjustment. The wage constraint enhances the concavity of firms‘ hiring rule, generating an endogenous profit-risk premium. In turn, uncertainty shocks increase the profit-risk premium when the economy operates close to the wage constraint. This implies that higher uncertainty can severely deepen a recession, although its impact is weaker on average. Additionally, the variance of the unforecastable component of future economic outcomes always increases at times of low economic activity. Thus, measured uncertainty rises in a recession even in the absence of uncertainty shocks.
KDI 경제정보센터