Uncertainty-Induced Reallocations and Growth
نویسندگان
چکیده
Focusing on U.S. data, we show the existence of a significant positive link between uncertainty and reallocation from private to government capital. This link is important because an increase in the aggregate share of government capital forecasts lower medium-term growth. We rationalize these novel empirical findings in a production economy in which the representative agent has an explicit fear toward uncertainty and government capital is, in equilibrium, a safe asset. This draft: April 20, 2017.
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