This is because uncertainty increases the value of waiting for new information when firms decide whether to undertake big projects, leading them to reduce current investment. 2 That uncertainty has such real effects is clear. However, the precise degree of uncertainty at any given point in time and its impact on economic activity are themselves uncertain.
1  See the IMF’s World Economic Outlook (WEO), “Coping with High Debt and Sluggish Growth,” October 2012, which also includes a discussion of uncertainty. Available at http://www.imf.org/external/pubs/ft/ weo/2012/02/index.htm. 2  B. Bernanke, “Irreversibility, Uncertainty, and Cyclical Investment,” The Quarterly Journal of Economics 98, no.1 (1983): 85–106.