The propagation of business sentiment within the European Union

Kukuvec, Anja and Oberhofer, Harald (2018) The propagation of business sentiment within the European Union. Department of Economics Working Paper Series, 257. WU Vienna University of Economics and Business, Vienna.


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This paper empirically investigates the propagation of business sentiment within the European Union (EU) and adds to the literature on shock absorption via a common market's real economy. To this end, we combine EU-wide official business sentiment indicators with world input-output (IO) data and information on indirect wage costs. Econometrically, we model interdependencies in economic activities via IO-linkages and apply space-time models. The resulting evidence provides indication for the existence of substantial spillovers in business sentiment formation. Accordingly, and highlighted by the estimated impacts of changes in indirect labor costs, policy reforms aiming at increasing the resilience of the European single market need to take these spillovers into account in order to increase its effectiveness.

Item Type: Paper
Additional Information: Financial support from the Oesterreichische Nationalbank (OeNB, grant number 16736) is gratefully acknowledged.
Keywords: Business sentiment, propagation, economic fluctuations, input-output linkages, networks, space-time model, policy reforms
Classification Codes: JEL C33, D84, E32, J32, L14
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 22 Jan 2018 14:52
Last Modified: 22 Oct 2019 00:41


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