THE ROLE OF UNCERTAINTY IN THE STOCK MARKET

Economic theory states that uncertainty, either about the state of the economy or policies, can negatively affect the economy by delaying consumers and firms' decisions to purchase goods or invest in new capital. In this project, you can investigate the role that uncertainty plays in the stock market. In particular, you can study the following questions: What is the effect of uncertainty on the level of stock market returns? What is the effect on the correlation between single stocks and the market? Are particularly sectors or stocks more sensitive to high degrees of uncertainty? **What separates this course from many other writing courses is that in your written work you are not simply expected to report on other papers' findings, or survey a particular literature. Instead, you are expected to write about your own findings, obtained from some simple empirical work (usually an OLS regression)