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Economic Quarterly

June 26, 2019

Richmond Fed’s Economic Quarterly Examines the Impact of Political Unrest on Economic Activity

In the latest issue of Economic Quarterly, Richmond Fed senior economist Toan Phan and Amazon senior economist Lance Kent try to quantify the economic effects of shocks to the volatility and skewness of business cycles. To do this, they take a unique approach of examining how shocks to a country’s total factor productivity during periods of political unrest affect the business cycle. Phan and Kent use a database of global political unrest to calibrate their model and to observe changes in the volatility and skewness of key economic variables during periods of unrest.

They find that political unrest increases volatility and negative skewness, which has substantial impacts on output growth, consumption growth and investment growth. All three measures drop significantly during periods of unrest, with negative skewness accounting for half of those drops in growth.  

This article and others in the latest issue of Economic Quarterly are available on our website.

Also in this issue:

    The Economic Quarterly is a free publication containing economic analysis pertinent to Federal Reserve monetary and banking policy. More information is available at (800) 322-0565 or online.


    As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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