Patrick Anderson, our executive chairman, used the Rapid Recursive® Toolbox for his paper “Persistent Unemployment & Policy Uncertainty,” published in the January 2014 edition of Business Economics. Patrick won the 2013 Edmund A. Mennis award from the National Association of Business Economics (NABE) for this paper.
In the recovery from the United States’ 2009 recession, unemployment has proven resistant to both aggressive fiscal policy and expansionary monetary policy. A possible explanation is the policy cost uncertainty hypothesis. For this, Patrick used a novel “value functional” or “recursive” model of firm behavior, in which managers maximize the value of the business rather than its profits. Using this approach, he demonstrated that policy cost uncertainty affects the hiring decisions of firms, that the response to policy uncertainty is higher in some industries than others, and that the scale of the firm also affects its sensitivity to policy risk.
View in the Business Economics Journal