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wisdom about the effects of monetary policy shock. …
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response to uncertainty shocks, firms increase their markups, in line with the theory of self-insurance against being stuck …
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Financial shocks represent a major driver of fluctuations in tail risk, defined as the 5th percentile of the forecast distributions of output and inflation. Since the variance and the asymmetry of the forecast distributions are largely driven by the left tail, financial shocks turn out to play a...
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