Ivan Alfaro

Alfaro, Iván & Park, Hoonsuk (2025)

Firm Uncertainty and Households: Spending, Savings, and Risks

Journal of Financial Economics, 172, s. 1-15. Doi: https://doi.org/10.1016/j.jfineco.2025.104143

Using daily banking and credit card data for thousands of households linked to U.S. publicly listed employers, we find novel evidence that firm-specific uncertainty persistently reduces future spending and spurs precautionary savings. A one-standard-deviation rise in option-implied firm volatility—akin to the S&P 500 VIX—predicts a $106 monthly spending drop (8 hours of wages) and a $193 increase in bank balances, reflecting notable cutbacks in typical non-durable goods and services. The mechanism operates through heightened household risks: firm uncertainty expands both income and consumption risk over the next year, with the largest effects among lower and top earners (notably the top 1%). Employers only partly shield earnings, while households only partly self-insulate consumption risk via smoothing channels. Detrimental uncertainty effects on households are stronger than firm stock price declines.

Alfaro, Iván; Bloom, Nicholas & Lin, Xiaoji (2023)

The Finance Uncertainty Multiplier

Journal of Political Economy, 132(2) , s. 577-615. Doi: https://doi.org/10.1086/726230 - Fulltekst i forskningsarkiv

We show how real and financial frictions amplify, prolong and propagate thenegative impact of uncertainty shocks. We first use a novel instrumentation strategy toaddress endogeneity in estimating the impact of uncertainty by exploiting differentialfirm exposure to exchange rate, policy, and energy price volatility in a panel of USfirms. Using common proxies for financial constraints we show that ex-ante financiallyconstrained firms cut their investment even more than unconstrained firms following anuncertainty shock. We then build a general equilibrium heterogeneous firms model withreal and financial frictions, finding financial frictions: i)amplifyuncertainty shocks bydoubling their impact on output; ii) increasepersistenceby extending the duration ofthe drop by 50%; and iii)propagateuncertainty shocks by spreading their impact ontofinancial variables. These results highlight why in periods of greater financial frictionsuncertainty can be particularly damaging.

Alfaro, Iván & Park, Hoonsuk (2020)

Firm Uncertainty and Household Spending

[Conference Lecture]. Event

Alfaro, Iván & Park, Hoonsuk (2020)

Firm Uncertainty and Household Spending

[Conference Lecture]. Event

Alfaro, Iván & Park, Hoonsuk (2020)

Firm Uncertainty and Household Spending

[Conference Lecture]. Event

Alfaro, Iván; Lin, Xiaoji & Bloom, Nicholas (2020)

The Finance Uncertainty Multiplier

[Conference Lecture]. Event

Alfaro, Iván & Park, Hoonsuk (2020)

Firm Uncertainty and Household Spending

[Conference Lecture]. Event