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American Economic Review· 2015Q1

Fiscal Volatility Shocks and Economic Activity

Jesús Fernández‐Villaverde, Pablo Guerrón-Quintana, Keith Kuester, Juan Francisco Rubio-Ramı́rez

Short summary

Unexpected increases in fiscal policy uncertainty significantly reduce economic activity, driven by an endogenous increase in markups.

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Field: General Economics, Econometrics and Finance

General Economics, Econometrics and FinanceEconomics, Econometrics and Finance