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  5. Uncertainty Shocks, Adjustment Costs and Firm Beliefs: Evidence From a Representative Survey

蝌蚪网 Journal:
Macroeconomics

ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)

Uncertainty Shocks, Adjustment Costs and Firm Beliefs: Evidence From a Representative Survey

  • Andreas Dibiasi
  • Heiner Mikosch
  • Samad Sarferaz
蝌蚪网 Journal: Macroeconomics (Forthcoming)

Abstract

This paper studies the dynamic effects of an uncertainty shock on firm expectations. We conduct a survey that confronts managers from a representative firm sample with a model-consistent uncertainty shock scenario. An exogenous increase in uncertainty significantly reduces managers' expected investment, employment and production in the short and mid run. We collect novel direct firm-level measures for different types of capital and labor adjustment costs. Adjustment costs vary strongly across types and sectors. They help explain firms' reactions to the shock, which provides evidence for the relevance of real-options channels. We com- pare the findings to DSGE and VAR results.

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