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Sudden Stop: When Did Firms Anticipate the Potential Consequences of Covid-19?

Lukas Buchheim, Carla Krolage () and Sebastian Link

No 8429, CESifo Working Paper Series from CESifo

Abstract: Covid-19 hit firms by surprise. In a high frequency, representative panel of German firms, the business outlook declined and business uncertainty increased only when the spread of the Covid-19 pandemic led to domestic policy changes: The announcement of nation-wide school closures on March 13 caused by far the largest change in business perceptions. In contrast, business perceptions hardly reacted to any other potential source of information: Firms did not learn from foreign policy measures, even if they relied on inputs from China or Italy. The local, county-level spread of Covid-19 cases affected expectations and uncertainty, albeit to a much lesser extent than the domestic policy changes.

Keywords: expectations; uncertainty; policy; Covid-19; firms (search for similar items in EconPapers)
JEL-codes: E66 E32 H32 D22 D84 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-eec and nep-mac
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