Sentiment and Uncertainty Fluctuations and Their Effects on the Euro Area Business Cycle

Bas Aarle () and Cindy Moons ()
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Bas Aarle: KU Leuven
Cindy Moons: KU Leuven

Journal of Business Cycle Research, 2017, vol. 13, issue 2, No 4, 225-251

Abstract: Abstract This is paper considers the role of economic sentiment and economic uncertainty in explaining economic adjustment in the Euro area during the Financial Crisis and Great Recession. The analysis is based on VAR models of economic activity, sentiment and uncertainty in four sectors—industry, retail, services and construction. Evidence is found that sentiment and uncertainty have non-negligible effects on economic activity. Finally also some additional evidence is provided by studying the two largest Euro area countries: Germany and France.

Keywords: Sentiment; Uncertainty; Ambiguity; Business cycle; Euro area (search for similar items in EconPapers)
JEL-codes: C32 C83 D84 E23 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s41549-017-0020-y

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