Trends in Uncertainty Faced by Japanese Firms: A comparison of the Global Financial Crisis and the COVID-19 Crisis

This study, using order-made aggregate data from the Short-Term Economic Survey of Enterprises (BOJ), a representative business survey in Japan, provides an overview of the trends in uncertainty faced by Japanese firms, focusing on a comparison of the Global Financial Crisis and the COVID-19 Crisis, and estimates the relationship between uncertainty and investment. The findings suggest that the nature of the COVID-19 Crisis differed significantly from that of the Global Financial Crisis. The Global Financial Crisis was characterized by demand shocks and a marked increase in financial uncertainty. The COVID-19 Crisis, on the other hand, was characterized by uncertainty shocks that were a mixture of supply and demand shocks. Uncertainty about the outlook for domestic demand and equipment capacity has a negative association with investment.