The Effects of Uncertainty Shocks in Booms and Busts

Dear Colleagues,

In the last few decades, we have witnessed notable growth in the interconnectedness of global markets as trade relations within the global financial system have expanded. However, a variety of crises, including those related to the economy, politics, war, and health, have intensified market volatility, and impeded the process of capital allocation. Therefore, we should be incorporating unexpected changes in market attitude, bubble bursts, or the propagation of negative expectations, into market-based uncertainty. Sudden political changes that might influence the economy are referred to as economic policy uncertainty, while truly exogenous economic uncertainty comes from factors beyond political systems or the financial markets. Uncertainty shocks are propagated largely through financial markets, in which uncertainty frequently spikes throughout recessions and declines during booms. Limited investment, decreased hiring activity and overall employment, lower firm-level and aggregate productivity, higher borrowing rates, increased stock market volatility, and augmented household savings are among the negative effects of increasing uncertainty.

There are several topics that this Special Issue will cover, including, but not limited to:

• Exploring the impact of economic uncertainty on commodities and financial markets;
• Investigating the financial markets’ reactions to political uncertainty;
• Exploring the association between economic uncertainty and investor attention;
• Assessing the connections between market uncertainty and international trade;
• Advanced quantitative methods for measuring news-based economic policy uncertainty;
• Examining the impact of economic policy uncertainty on company performance;
• Analyzing the effect of economic policy uncertainty on default risk;
• Researching the relationship between geopolitical risk and economic policy uncertainty;
• Inspecting the impact of economic policy uncertainty on the systemic risk of banks.

Prof. Dr. Ştefan Cristian Gherghina
Guest Editor

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• economic uncertainty
• political uncertainty
• geopolitical uncertainty
• news-based uncertainty
• financial markets
• commodity markets
• macroeconomic shocks
• systemic risk
• investor attention