Inspecting the Relationship Between Business Confidence and Industrial Production: Evidence on Italian Survey Data

Giancarlo Bruno, L. Crosilla and Patrizia Margani
Additional contact information
L. Crosilla: ISTAT

Journal of Business Cycle Research, 2019, vol. 15, issue 1, No 1, 24 pages

Abstract: Abstract The aim of this paper is to investigate the relationship between the manufacturing confidence indicator (CI) and the industrial production index (IPI) as well as to address the effects of the “Great Recession” on this relation. Some stylized facts about CI are firstly presented and the stability of the relationship in the framework of a linear model is subsequently explored. In addition, the findings are tested to be robust with respect to a “sample selection” effect in survey data and also to the hypothesis that they may suggest a change in the long-term trends in the industrial activity. The empirical evidence shows that: (1) the change in the relationship may be due to some cyclical reasons, rather than structural ones; (2) the performance of CI is not affected by the different permanence of firms in the panel; (3) agents are likely to adjust their production plans during the financial crisis, considering a new lower benchmark for their industrial activity in the long term. In particular, as the capacity utilization that managers consider as “ideal/sufficient” is proven to be changed over time, this finding may be consistent with the presence of non-linearities in the relation between CI and IPI.

Keywords: Survey data; Industrial production index; Non-linear relationship; Capacity utilization (search for similar items in EconPapers)
JEL-codes: C22 E32 L60 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://link.springer.com/10.1007/s41549-018-00033-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:jbuscr:v:15:y:2019:i:1:d:10.1007_s41549-018-00033-4

Ordering information: This journal article can be ordered from
http://www.springer. ... nomics/journal/41549

DOI: 10.1007/s41549-018-00033-4

Access Statistics for this article

Journal of Business Cycle Research is currently edited by Michael Graff

More articles in Journal of Business Cycle Research from Springer, Centre for International Research on Economic Tendency Surveys (CIRET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().