Business expectations and public policies amid exogenous shocks: The COVID-19 case in Latin America

Paula Margaretic, Santiago Mingo and Agustin Sotelo

Global Finance Journal, 2025, vol. 67, issue C

Abstract: How do public policy responses to exogenous shocks shape business expectations? We examine this question in the context of the COVID-19 pandemic, focusing on the impact of two broad types of policy responses: containment policies (e.g., lockdowns and mobility restrictions) and restorative policies (e.g., vaccine rollouts). Using monthly panel data from 42 countries—20 of which are emerging economies—for the period from 2018 to 2021, we test the effects of both domestic and neighboring countries' policies on business expectations. We find that containment policies significantly depress expectations, while restorative policies enhance them. These effects are moderated by country-level institutional factors such as government trust, political orientation, and financial capacity. We also uncover positive spillover effects from containment policies in neighboring countries. In particular, Latin American countries demonstrate great sensitivity to both domestic and neighboring countries' policies, with this sensitivity being moderated by their institutional characteristics. By focusing on business expectations as a forward-looking mechanism and highlighting institutional and regional variation in responses, this study contributes to research on resilience during global crises.

Keywords: Business confidence; Exogenous shocks; Public policy; Spillover effects; Financial markets; Latin America; COVID-19 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1044028325000523
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:67:y:2025:i:c:s1044028325000523

DOI: 10.1016/j.gfj.2025.101125

Access Statistics for this article

Global Finance Journal is currently edited by Manuchehr Shahrokhi

More articles in Global Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().