The Impact of Uncertainty Shocks on the UK Economy

Author/Editor:

Prakash Kannan ; Stephanie Denis

Publication Date:

March 8, 2013

Electronic Access:

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Summary:

This paper quantifies the economic impact of uncertainty shocks in the UK using data that span the recent Great Recession. We find that uncertainty shocks have a significant impact on economic activity in the UK, depressing industrial production and GDP. The peak impact is felt fairly quickly at around 6-12 months after the shock, and becomes statistically negligible after 18 months. Interestingly, the impact of uncertainty shocks on industrial production in the UK is strikingly similar to that of the US both in terms of the shape and magnitude of the response. However, unemployment in the UK is less affected by uncertainty shocks. Finally, we find that uncertainty shocks can account for about a quarter of the decline in industrial production during the Great Recession.

Series:

Working Paper No. 13/66

Subject:

English

Publication Date:

March 8, 2013

ISBN/ISSN:

9781475552690/1018-5941

Stock No:

WPIEA2013066

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

24

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