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Economic sentiment during the COVID pandemic: Evidence from search behaviour in the EU

Wouter van der Wielen and Salvador Barrios ()

Journal of Economics and Business, 2021, vol. 115, issue C

Abstract: The COVID-19 pandemic has inflicted an economic hardship unprecedented for the modern age. In this paper, we show that the health crisis and ensuing lockdown, came with an unseen shift in households’ economic sentiment. First, using a European dataset of country-level and regional internet searches, we document a substantial increase in people's business cycle related searches in the months following the coronavirus outbreak. People's unemployment concerns jumped to levels well-above those during the Great Recession. Second, we observe a significant, coinciding slowdown in labour markets and consumption. Third, our analysis shows that the ensuing shift in sentiment was significantly more outspoken in those EU countries hit hardest in economic terms. Finally, we show that unprecedented fiscal policy actions, such as the short-time work schemes implemented or reformed at the onset of the COVID-crisis, however, have not eased economic sentiment.

Keywords: COVID-19; Economic sentiment; Employment; Consumption; Google Trends (search for similar items in EconPapers)
JEL-codes: D12 D83 D84 E32 J60 (search for similar items in EconPapers)
Date: 2021
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Working Paper: Fear and Employment During the COVID Pandemic: Evidence from Search Behaviour in the EU (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:115:y:2021:i:c:s0148619520304148

DOI: 10.1016/j.jeconbus.2020.105970

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