New evidence on asymmetric mechanisms of financial shocks in the United States

According to a recent Bocconi study, upside uncertainty can boost GDP because overoptimism inflates markets, suggesting an asymmetric approach to monetary policy with respect to swings in expectations

In these turbulent times, financial and economic shocks are always around the corner. But, as Chiara Scotti of the Bank of Italy explains, we are learning how to deal with them: the Great Recession was less damaging and persistent than the Great Depression, and the recent energy crisis has caused less havoc than the oil crises of the 1970s

Faced with uncertainty and the impossibility of predicting financial crises, pandemics or geopolitical shocks, it is essential to think ahead by recognizing our limits and investing in the capacity to adapt. More flexible economic models and the creation of default options, resilient institutions and preventive strategies are fundamental tools to manage the unknown