The propagation of business sentiment within the European Union

Anja Kukuvec, Harald Oberhofer

Publication: Working/Discussion PaperWU Working Paper

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Abstract

This paper empirically investigates the propagation of business sentiment within the European Union (EU) and adds to the literature on shock absorption via a common market's real economy. To this end, we combine EU-wide official business sentiment indicators with world input-output (IO) data and information on indirect wage costs. Econometrically, we model interdependencies in economic activities via IO-linkages and apply space-time models. The resulting evidence provides indication for the existence of substantial spillovers in business sentiment formation. Accordingly, and highlighted by the estimated impacts of changes in indirect labor costs, policy reforms aiming at increasing the resilience of the European single market need to take these spillovers into account in order to increase its effectiveness.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
DOIs
Publication statusPublished - 2018

Publication series

SeriesDepartment of Economics Working Paper Series
Number257

WU Working Paper Series

  • Department of Economics Working Paper Series

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