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Gold and Oil Prices Unlock Supply vs. Demand Drivers of US Uncertainty Shocks
• The main paper by Bettendorf uses the distinct price reactions of gold (a safe haven) and oil (a cyclical commodity) to disentangle supply-side uncertainty shocks (which raise both) from demand-side uncertainty shocks (which raise gold but lower oil), finding that supply-driven uncertainty has a more persistent and damaging effect on US equity and credit markets.
• Beckmann & Bettendorf extend this framework to global portfolio flows, showing that uncertainty shocks—especially supply-side ones—trigger sharp retrenchment from equity and bond markets, with emerging economies suffering disproportionately, reinforcing the main paper’s distinction between shock types.
• Metiu & Prieto (inflation uncertainty) and Metiu & Prieto (stock return correlation) both demonstrate that heightened uncertainty amplifies macroeconomic volatility and equity market co-movement, aligning with the main paper’s finding that supply-side uncertainty is particularly destabilizing for financial stability.
• Falck & Schulte (weather shocks and food prices) provide a complementary real-economy channel: temperature-driven supply shocks propagate through commodity prices similarly to oil supply shocks, underscoring that supply-side disruptions—whether climatic or geopolitical—have outsized inflationary and financial market consequences.
• Campolmi’s older two-country model of oil shocks offers a historical parallel: the 1970s oil supply shock versus the 2000s demand-driven oil surge, directly supporting the main paper’s core insight that identifying the source of commodity price moves is critical for predicting macroeconomic and financial outcomes.
Cross-cutting theme: The source of uncertainty—supply versus demand—determines whether it fuels stagflationary pressures or cyclical adjustments, with supply-side shocks consistently more harmful to markets and growth.
————————————————————
Sources: MAIN: Disentangling supply-side and demand-side effects of uncertainty shocks on U.S. … · R1: On the effects of global uncertainty shocks on portfolio flows | Discussion pape… · R2: The macroeconomic effects of inflation uncertainty | Discussion paper 32/2023: N… · R3: From weather to wallet: Evidence on seasonal temperature shocks and global food … · R4: Time-varying stock return correlation, news shocks, and business cycles | Discus… · R5: WP 2008/5. Alessia Campolmi: Oil price shocks: Demand vs Supply in a two-country…
• The main paper by Bettendorf uses the distinct price reactions of gold (a safe haven) and oil (a cyclical commodity) to disentangle supply-side uncertainty shocks (which raise both) from demand-side uncertainty shocks (which raise gold but lower oil), finding that supply-driven uncertainty has a more persistent and damaging effect on US equity and credit markets.
• Beckmann & Bettendorf extend this framework to global portfolio flows, showing that uncertainty shocks—especially supply-side ones—trigger sharp retrenchment from equity and bond markets, with emerging economies suffering disproportionately, reinforcing the main paper’s distinction between shock types.
• Metiu & Prieto (inflation uncertainty) and Metiu & Prieto (stock return correlation) both demonstrate that heightened uncertainty amplifies macroeconomic volatility and equity market co-movement, aligning with the main paper’s finding that supply-side uncertainty is particularly destabilizing for financial stability.
• Falck & Schulte (weather shocks and food prices) provide a complementary real-economy channel: temperature-driven supply shocks propagate through commodity prices similarly to oil supply shocks, underscoring that supply-side disruptions—whether climatic or geopolitical—have outsized inflationary and financial market consequences.
• Campolmi’s older two-country model of oil shocks offers a historical parallel: the 1970s oil supply shock versus the 2000s demand-driven oil surge, directly supporting the main paper’s core insight that identifying the source of commodity price moves is critical for predicting macroeconomic and financial outcomes.
Cross-cutting theme: The source of uncertainty—supply versus demand—determines whether it fuels stagflationary pressures or cyclical adjustments, with supply-side shocks consistently more harmful to markets and growth.
————————————————————
Sources: MAIN: Disentangling supply-side and demand-side effects of uncertainty shocks on U.S. … · R1: On the effects of global uncertainty shocks on portfolio flows | Discussion pape… · R2: The macroeconomic effects of inflation uncertainty | Discussion paper 32/2023: N… · R3: From weather to wallet: Evidence on seasonal temperature shocks and global food … · R4: Time-varying stock return correlation, news shocks, and business cycles | Discus… · R5: WP 2008/5. Alessia Campolmi: Oil price shocks: Demand vs Supply in a two-country…