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The Ides Of March. Did Italian Covid-19 Crisis Fuel Us Economic Policy Uncertainty?

Author

Listed:
  • Garafas, Georgios

    (Department of Business Administration of Food and Agricultural Enterprises, University of Patras, Greece)

  • Dimitriou, Dimitrios

    (Department of Business Administration, Athens University of Economic and Business, Athens, Greece)

Abstract

This paper empirically investigates the possibility the Italian severe hit from the COVID-19 pandemic increased the US’s Economic Policy Uncertainty (EPU) index. Using Johansen cointegration and Granger causality econometric techniques, we conclude that the above relationship holds. It seems that the recent COVID-19 disaster occurred in Italy (due to high death toll) fueled the economic uncertainty in the US. It is high possible, the anxiety of US citizens propelled this pattern. These results show that the policy makers should be more cautious for the global propagation of COVID-19, in order to improve their political decisions, even in the US. Le Idi di marzo. La crisi in Italia a seguito del Covid-19 ha alimentato l’incertezza politica degli Stati Uniti? In questo articolo si esamina empiricamente la possibilità che il drammatico impatto della pandemia di Covid-19 in Italia abbia accresciuto l’indice EPU (Economic Policy Uncertainty) negli USA. L’utilizzo delle tecniche di cointegrazione di Johansen e di causalità econometrica di Granger supporta questa affermazione. Vi è evidenza che la drammatica situazione in Italia a seguito della diffusione del Covid-19 (dovuta ad un alto tasso di mortalità) ha alimentato l’incertezza economica negli Stati Uniti. È possibile che l’ansietà degli americani abbia incrementato questa tendenza. Questi risultati mostrano che a causa della propagazione del Corona-virus i governi dovrebbero essere più cauti per migliorare le loro decisioni politiche, persino negli Stati Uniti.

Suggested Citation

  • Garafas, Georgios & Dimitriou, Dimitrios, 2020. "The Ides Of March. Did Italian Covid-19 Crisis Fuel Us Economic Policy Uncertainty?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(4), pages 511-524.
    • Handle: RePEc:ris:ecoint:0884
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    References listed on IDEAS

    as
    1. Claudiu Tiberiu Albulescu, 2020. "Do COVID-19 and crude oil prices drive the US economic policy uncertainty?," Working Papers hal-02509450, HAL.
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    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. Claudiu Albulescu, 2020. "Coronavirus and financial volatility: 40 days of fasting and fear," Papers 2003.04005, arXiv.org.
    5. Claudiu Albulescu, 2020. "Coronavirus and oil price crash," Papers 2003.06184, arXiv.org, revised Mar 2020.
    6. Corbet, Shaen & Larkin, Charles & Lucey, Brian, 2020. "The contagion effects of the COVID-19 pandemic: Evidence from gold and cryptocurrencies," Finance Research Letters, Elsevier, vol. 35(C).
    7. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    8. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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    Cited by:

    1. Georgios Garafas, 2022. "The nexus between unemployment and Covid-19 vaccine in the U.S. Evidence from Google trends," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 6(1), pages 27-32, December.

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    More about this item

    Keywords

    Economic Uncertainty; VAR; Cointegration; Granger Causality; COVID-19;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy

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