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Agreed and Disagreed Uncertainty

Author

Listed:
  • Luca Gambetti
  • Dimitris Korobilis
  • John D. Tsoukalas
  • Francesco Zanetti

Abstract

Weformalize two novel concepts of uncertainty in a model of imperfect and dispersed information: agreed and disagreed uncertainty. We show that consumer disagreement significantly shapes the effect of uncertainty on economic activity. Episodes of elevated uncertainty accompanied by high consumer disagreement (disagreed uncertainty) do not exert negative effects on economic activity. In contrast, episodes of high uncertainty with low consumer disagreement (agreed uncertainty) lead to substantial economic contractions. These results challenge the conventional view that uncertainty invariably triggers recessions. We establish these findings using both time-series and micro-survey panel methods.

Suggested Citation

  • Luca Gambetti & Dimitris Korobilis & John D. Tsoukalas & Francesco Zanetti, 2025. "Agreed and Disagreed Uncertainty," Working Papers 2025_01, Business School - Economics, University of Glasgow.
    • Handle: RePEc:gla:glaewp:2025_01
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    More about this item

    Keywords

    Uncertainty; information frictions; disagreement; Bayesian vector autoregression (VAR); sign restrictions.;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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