Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240344 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 4/2021
Publisher: 
Bank of Finland, Helsinki
Abstract: 
I study the effects of the Covid-19 pandemic on business confidence in 11 Euro area countries and its consequent impact on economic activity. To obtain causal effects, I instrument business confidence with domestic household confidence as well as average household confidence in neighboring countries. I find evidence suggesting that the confidence and expectations channel was an important component to the economic transmission of Covid-19. A one standard deviation drop in business confidence leads to between 5-6 and 9 percent fall in economic activity in the industrial and wholesale and retail trade sectors respectively. These results highlight the importance of managing confidence and expectations in crises episodes.
Subjects: 
Business confidence
survey expectations
Covid-19
JEL: 
E23
E66
E71
I12
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-370-6
Document Type: 
Working Paper

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