Template-Type: ReDIF-Paper 1.0
Title: Do Plants Freeze Upon Uncertainty Shocks?
Author-Name: Ariel Mecikovsky
Author-Email: 
Author-Name: Matthias Meier
Author-Email: m.meier@uni-mannheim.de
Classification-JEL: E02, E03
Keywords: Uncertainty shocks; Job Flows; Financial Frictions

Abstract: What explains the impact of uncertainty shocks on the economy? This paper
uses highly disaggregated data on industry-level job flows to investigate the empirical
relevance of various transmission channels of uncertainty shocks. The channels
we consider are labor adjustment frictions, capital adjustment frictions, nominal
ridigities, and financial frictions. For each channel, we derive testable implications
regarding the response of job flows to uncertainty shocks. Empirically, uncertainty
shocks lead to more job destruction and less job creation in more than 80% of all
industries. The effect is significantly stronger in industries that face tighter financial
constraints, which supports the financial frictions channel. In contrast, our evidence
does not support the other three channels.

Note: 
Length: 37
Creation-Date: 2019-03
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp075
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2019_075