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The cost of uncertainty

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  • Carlos Esteban Posada Posada

Abstract

The traditional and most common view of economists on the issue of (bad) uncertainty and its effects has been one of partial equilibrium. When the topic is approached from a macroeconomic perspective, the most frequent has been the examination of the effects of uncertainty shocks on short-term dynamics with various methods, but mainly with neo-Keynesian and statistical (vector autoregressive) models. This document responds to another concern and has two objectives: 1. to reflect on this issue with some instruments of the macroeconomist's toolbox related to a medium or long-term horizon, and 2. report a ciphering of the social cost of uncertainty in the Colombian case.

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  • Carlos Esteban Posada Posada, 2024. "The cost of uncertainty," Papers 2409.16550, arXiv.org.
    • Handle: RePEc:arx:papers:2409.16550
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    References listed on IDEAS

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    1. N. Bloom, 2016. "Fluctuations in uncertainty," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 4.
    2. Guillermo A. Calvo, 1998. "CAPITAL FLOWS AND CAPITAL-MARKET CRISES: The Simple Economics of Sudden Stops," Journal of Applied Economics, Taylor & Francis Journals, vol. 1(1), pages 35-54, November.
    3. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 25(2), pages 65-86.
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