COVID-19 Uncertainty: A Tale of Two Tails

9 Pages Posted: 19 Nov 2021

See all articles by Philip Bunn

Philip Bunn

Bank of England

David Altig

Federal Reserve Bank of Cleveland; Federal Reserve Banks - Federal Reserve Bank of Atlanta; University of Chicago - Booth School of Business

Lena Anayi

Bank of England

Jose Maria Barrero

ITAM - Business School

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Steven J. Davis

University of Chicago; National Bureau of Economic Research (NBER); Hoover Institution

Brent Meyer

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Emil Mihaylov

Federal Reserve Banks - Federal Reserve Bank of Dallas

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

Greg Thwaites

University of Nottingham

Date Written: November 16, 2021

Abstract

Uncertainty about own-firm sales growth rates over the year ahead roughly doubled in reaction to the COVID shock, according to our surveys of U.S. and U.K. business executives. Firm-level uncertainty receded after spring 2020 but remains much higher than pre-COVID levels. Moreover, the nature of firm-level uncertainty has shifted greatly since the pandemic struck: Initially, business executives perceived an enormous increase in downside uncertainty, which has now dissipated. As of October 2021, almost all of the extra firm-level uncertainty is to the upside. In short, economic uncertainty associated with the pandemic has morphed from a tale of the lower tail into a tale about the upper tail.

Suggested Citation

Bunn, Philip and Altig, David and Altig, David and Anayi, Lena and Barrero, Jose Maria and Bloom, Nicholas and Davis, Steven J. and Meyer, Brent H. and Mihaylov, Emil and Mizen, Paul and Thwaites, Greg, COVID-19 Uncertainty: A Tale of Two Tails (November 16, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-135, Available at SSRN: https://ssrn.com/abstract=3965088 or http://dx.doi.org/10.2139/ssrn.3965088

Philip Bunn

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

David Altig

Federal Reserve Banks - Federal Reserve Bank of Atlanta

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States
216-579-2041 (Phone)

University of Chicago - Booth School of Business

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Lena Anayi

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Jose Maria Barrero

ITAM - Business School ( email )

Rio Hondo No. 1
Col. Tizapan-San Angel Alc. Alvaro Obregon
Ciudad de Mexico, 01000
Mexico

Nicholas Bloom

Stanford University - Department of Economics ( email )

Landau Economics Building, Room 231
579 Serra Mall
Stanford, CA 94305-6072
United States
650-725-7836 (Phone)

HOME PAGE: http://economics.stanford.edu/faculty/bloom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Steven J. Davis (Contact Author)

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7312 (Phone)
773-702-0458 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hoover Institution

434 Galvez Mall
Stanford University
Stanford, CA 94305-6010
United States
773 251 1795 (Phone)

Brent H. Meyer

Federal Reserve Banks - Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Emil Mihaylov

Federal Reserve Banks - Federal Reserve Bank of Dallas

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Paul Mizen

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5479 (Phone)
+44 115 951 4159 (Fax)

Bank of England

Threadneedle Street
London, EC2R 8AH
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Greg Thwaites

University of Nottingham

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