Uncertainty shocks in an intangible economy
Uncertainty shocks in an intangible economy
This paper studies uncertainty shocks in the context of an intangible economy. I build a two-sector dynamic stochastic general equilibrium (DSGE) model to understand a shift in investment composition and its implications for the transmission of uncertainty shocks. The model is motivated by the role of intangible capital as a cushion, mitigating the adverse effects of uncertainty on investment, as suggested by firm-level data. The quantitative analysis shows that heightened uncertainty directs resources toward the intangible sector, making the economy more intangible-intensive. The rising importance of intangibles diminishes aggregate volatility in the uncertainty-driven business cycle.
DSGE, Intangibles, Investment compositions, Uncertainty shocks
Zhang, Shuonan
093a5840-cc2a-4306-9eff-522daca9a79f
4 December 2025
Zhang, Shuonan
093a5840-cc2a-4306-9eff-522daca9a79f
Zhang, Shuonan
(2025)
Uncertainty shocks in an intangible economy.
Journal of Economic Dynamics and Control, 182, [105230].
(doi:10.1016/j.jedc.2025.105230).
Abstract
This paper studies uncertainty shocks in the context of an intangible economy. I build a two-sector dynamic stochastic general equilibrium (DSGE) model to understand a shift in investment composition and its implications for the transmission of uncertainty shocks. The model is motivated by the role of intangible capital as a cushion, mitigating the adverse effects of uncertainty on investment, as suggested by firm-level data. The quantitative analysis shows that heightened uncertainty directs resources toward the intangible sector, making the economy more intangible-intensive. The rising importance of intangibles diminishes aggregate volatility in the uncertainty-driven business cycle.
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e-pub ahead of print date: 28 November 2025
Published date: 4 December 2025
Keywords:
DSGE, Intangibles, Investment compositions, Uncertainty shocks
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Local EPrints ID: 508596
URI: http://eprints.soton.ac.uk/id/eprint/508596
ISSN: 0165-1889
PURE UUID: 327d77f3-b980-48a2-a8c5-f4250b846d12
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Date deposited: 27 Jan 2026 18:08
Last modified: 28 Jan 2026 04:30
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Author:
Shuonan Zhang
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