01990cas a2200253 a 4500 AALejournalIMF015037 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498356305 1018-5941 BD-DhAAL BD-DhAAL Choi, Sangyup. Uncertainty and Unemployment : The Effects of Aggregate and Sectoral Channels / Sangyup Choi, Prakash Loungani. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We study the role of uncertainty shocks in explaining unemployment dynamics, separating out the role of aggregate and sectoral channels. Using S and P500 data from the first quarter of 1957 to third quarter of 2014, we construct separate indices to measure aggregate and sectoral uncertainty and compare their effects on the unemployment rate in a standard macroeconomic vector autoregressive (VAR) model. We find that aggregate uncertainty leads to an immediate increase in unemployment, with the impact dissipating within a year. In contrast, sectoral uncertainty has a long-lived impact on unemployment, with the peak impact occurring after two years. The results are consistent with a view that the impact of aggregate uncertainty occurs through a 'wait-and-see' mechanism while increased sectoral uncertainty raises unemployment by requiring greater reallocation across sectors. Mode of access: Internet Loungani, Prakash. IMF Working Papers; Working Paper ; No. 2015/036 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/036/001.2015.issue-036-en.xml IMF e-Library