Munich Personal RePEc Archive

Industrial production and Confidence after the crisis: what's going on?

Malgarini, Marco (2012): Industrial production and Confidence after the crisis: what's going on?

[img]
Preview
PDF
MPRA_paper_53813.pdf

Download (869kB) | Preview

Abstract

The paper provides new evidence on possible structural breaks in the relationship among business Confidence and industrial activity in Europe in the aftermath of the recession. Possible interpretation is that the crisis has determined a change in the pattern of response in surveys, firms now incorporating a lower level of long term output. A confirmation comes from the analysis of survey data on capacity utilisation: we find indeed that perceived potential output or potential output growth has declined throughout the euro area. Results may be rather important for business cycle analysts and policy makers: for the former, the suggestion is to consider business survey data with particular care, since their interpretation has changed as a consequence of the crisis. Policy makers on the other hand should consider that the recession has changed long term expectations of agents, possibly significantly affecting transmission channels of both monetary and fiscal policies.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.