2016-12-26T14:59:35

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We study the impact of profit uncertainty on investment and whether or not this response is different in industries that are dominated by small firms versus those that are dominated by relatively larger firms. Our key findings are that the sign of the investment-uncertainty relationship is negative, and that the quantitative negative impact is substantially greater in industries dominated by small firms. These results are robust to accounting for potential endogeneity of the uncertainty measure, alternate procedures for measuring uncertainty, and alternate ways of segmenting industries into small-and large-firm groups.

This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978-2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

This paper asks how well Okun's Law fits short-run unemployment movements in the United States since 1948 and in 20 advanced economies since 1980. We find that Okun's Law is a strong relationship in most countries, and one that is fairly stable over time. Accounts of breakdowns in the Law, such as the emergence of "jobless recoveries," are flawed or exaggerated. We also find that the coefficient in the relationship-the effect of a 1% change in output on the unemployment rate-varies substantially across countries. This variation is partly explained by idiosyncratic features of national labor markets, but it is not related to differences in employment protection legislation. JEL codes: E24, E32We thank the editor and two referees for very useful comments. We are also grateful to

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We estimate the impact of price uncertainty on investment using a panel of U.S. manufacturing industries. When we pool the data for all industries, uncertainty has no impact on current investment. However, this pooled estiimate conceals an interesting difference across industries. For industries with a high degree of product market competition, the estimated impact is negative, reasonably large, and significantly different from zero. For relatively non-competitive industries, the impact is always small and not significantly different from zero. The finding of a negative relationship between investment and price uncertainty in competitive industries is broadly consistent with the predictions of models that incorporate irreversibility of capital investment.

No abstract