International confidence spillovers and business cycles in small open economies

Michal Brzoza-Brzezina and Jacek Kotłowski

Empirical Economics, 2021, vol. 61, issue 2, No 9, 773-798

Abstract: Abstract The economic literature has for a long time been looking for explanations of a very strong international correlation of business cycles. This paper shows empirically that common fluctuations can to some degree be the effect of confidence shocks being transmitted internationally. We focus on a large (euro area) and a small, nearby economy (Poland). Our results show that euro area confidence fluctuations account for approximately 40–70% of business cycle fluctuations both in the euro area and in Poland. More importantly, their transmission happens not only via traditional channels (e.g., by confidence affecting euro area GDP and then Polish GDP via trade), but to a large extent occurs directly (e.g., by news spreading via media).

Keywords: International spillovers; Animal spirits; Sentiments; Business cycle (search for similar items in EconPapers)
JEL-codes: C32 E32 F44 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s00181-020-01887-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
Working Paper: International confidence spillovers and business cycles in small open economies (2020)
Working Paper: International confidence spillovers and business cycles in small open economies (2018)
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:spr:empeco:v:61:y:2021:i:2:d:10.1007_s00181-020-01887-3

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-020-01887-3

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().