Confidence and business investment

Malin Andersson and Benjamin Mosk

Economic Bulletin Boxes, 2019, vol. 4

Abstract: Economic agents’ confidence and developments in the real economy are intrinsically linked. Confidence largely reflects broad economic conditions but, at times, may also become an autonomous source of business cycle fluctuations. This box looks at the potential propagation effects of lower confidence on investment in recent times. Isolating the structural confidence shocks from the euro area Economic Sentiment Indicator and applying them in the ECB’s main macroeconomic projection model suggests that confidence shocks had a positive impact on business investment growth in the last two years and a negative one in 2019. JEL Classification: E22, E37, D84

Keywords: confidence; Investment (search for similar items in EconPapers)
Date: 2019-06
Note: 427284
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbbox:2019:0004:4

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