Confidence and economic activity in Europe

Saccal, Alessandro (2022): Confidence and economic activity in Europe. Published in: The IUP Journal of Applied Economics , Vol. XXI, No. 1 (3 January 2022): pp. 55-67.

Abstract

This study supplies additional empirical evidence of responses in real economic activity to shocks in confidence. A Structural Vector Autoregression (SVAR), featuring confidence, real consumption and real output, is constructed with respect to the Euro Area (EA) and eight European nations. The results are mixed: responses exhibit reversibility and irreversibility, suggesting the formulation of a theoretical mechanism capable of formalizing such a variety. The potential causes behind confidence in the same nations are, moreover, evaluated through a panel data regression. The results indicate aversion towards output, inflation, unemployment, monetary independence and financial openness, but favor population, exchange rate rigidity and the accumulation of sovereign debt.

• Item Type: MPRA Paper
• Language: English
• Keywords: confidence; economic activity; Europe.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications

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