Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263665 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15449
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using a new survey of firms in New Zealand, we document how exogenous variation in the macroeconomic uncertainty perceived by firms affects their economic decisions. We use randomized information treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of some firms. The effects on their decisions relative to their initial plans as well as relative to an untreated control group are measured in a follow-up survey six months later. We find that as firms become more uncertain, they reduce their prices, employment, and investment, their sales decline, and they become less likely to invest in new technologies or open new facilities. These ex-post effects of uncertainty are similar to how firms say they would respond to higher uncertainty when asked hypothetical questions.
Subjects: 
uncertainty
firm decisions
surveys
randomized control trial
JEL: 
E3
E4
E5
Document Type: 
Working Paper

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