Equity market uncertainty can reduce real GDP – researcher

stock market

A temporary increase in equity market uncertainty could have persistent effects on the economy, a researcher from the US’s Federal Reserve Bank of Kansas City says in an economic letter.

Using historical data on equity market volatility, Brent Bundick estimates the longer-term effects of the increased uncertainty in US equity markets seen in the fourth quarter of last year. He uses the Chicago Board Options Exchange Volatility Index (Vix) as a measure of uncertainty.

During the fourth quarter

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