Precautionary pricing and increasing markups in representative-agent DSGE models with nominal rigidities are commonly used to generate negative output effects of uncertainty shocks. We assess whether this theoretical model channel is consistent with the data. Three things stand out. First,...

It seems clear that the ECB will raise interest rates in July 2022 and end its asset purchase program. This should send a strong and important signal to markets and economic players that the ECB continues to take its mandate for price stability seriously. However, it cannot be said with absolute...