Is Uncertainty Causing High Unemployment

Posted: May 19, 2012 12:01 AM

In speaking with various business owners the word that I hear most often to explain why the economy remains so stagnant is "uncertainty."  Dr. Sanjai Bhagat, Provost Finance Professor at the University of Colorado and Contributing Editor for A Line of, has extensively studied this this issue.  He presented his findings last week in Washington, DC at a special event sponsored by the American Enterprise Institute.  Following is a video link to the entire presentation and an brief post-event summary by AEI.  Also provided is a link to his research document.

"What is causing continued slow economic growth and high unemployment in America? On Friday at AEI, Sanjai Bhagat of the University of Colorado at Boulder discussed his research exploring the correlation between job losses and persistent unemployment. Bhagat began with a presentation of the paper he co-wrote with Iulian Obreja. Noting historically high cash flows and recent capital injections from the U.S. Federal Reserve, Bhagat suggested that capital shortfall cannot explain America's currently weak economic recovery. Instead, Bhagat asserted that high business uncertainty results in a significant reduction in job creation and investment."

Employment Uncertainty Policy Paper, Bhagat-Obreja, pdf