Economic activity and financial markets: the case of air travel in COVID-19 pandemic

Xiaoyang Wang, Peimin Chen (pmchen@sbs.edu.cn) and Jianhe Liu (bruceliu@zufe.edu.cn)
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Peimin Chen: Shanghai Business School
Jianhe Liu: Zhejiang University of Finance & Economics (ZUFE)

Economics Bulletin, 2021, vol. 41, issue 3, 2116-2126

Abstract: We investigate the co-movements of real economic activity with COVID-19 cases, crude oil and financial markets using the case of US airline industry. The pairwise relationships are examined through wavelet coherence method. Results show that air travel activity positively leads COVID-19 infections in the 4-8 days scales. But it has no consistent relationship with crude oil or financial markets. The findings connect the literature in the nexus of real economic activity, COVID-19 infections and financial markets. A policy implication is that, despite dampening real economic activities, restrictive policies to curb the pandemic may pose limited impact on financial markets if coupled with stimulus policies.

Keywords: COVID-19; economic activity; financial markets; wavelet coherence (search for similar items in EconPapers)
JEL-codes: G1 (search for similar items in EconPapers)
Date: 2021-09-18
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