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COVID-19-Induced Shocks and Uncertainty

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  • Mirela Miescu
  • Raffaele Rossi

Abstract

Using statistical identification, we extract a COVID-19-induced shock by exploiting large daily jumps in financial markets caused by news about the pandemic. This shock depresses economic and financial indicators, increases risk and uncertainty measures, has sizeable distributional effects, and hits most harshly those industries relying on face-to-face interactions. Impulse response function analysis across various identification strategies leads us to interpret the statistical COVID-19-induced shock as a structural uncertainty shock.

Suggested Citation

  • Mirela Miescu & Raffaele Rossi, 2020. "COVID-19-Induced Shocks and Uncertainty," Economics Discussion Paper Series 2013, Economics, The University of Manchester, revised Aug 2021.
    • Handle: RePEc:man:sespap:2013
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    2. Dutordoir, Marie & Shemesh, Joshua & Veld, Chris & Wang, Qing, 2024. "Can existing corporate finance theories explain security offerings during the COVID-19 pandemic?," Journal of Empirical Finance, Elsevier, vol. 79(C).
    3. Masayuki MORIKAWA, 2022. "Uncertainty of Firms' Medium-term Outlook during the COVID-19 Pandemic," Discussion papers 22079, Research Institute of Economy, Trade and Industry (RIETI).
    4. Suyi Zheng & Jiandong Wen, 2023. "How Does Firm-Level Economic Policy Uncertainty Affect Corporate Innovation? Evidence from China," Sustainability, MDPI, vol. 15(7), pages 1-23, April.
    5. Dong, Xianjing & Zhang, Xiaojuan & Zhang, Congcong & Bi, Chunyu, 2023. "Building sustainability education for green recovery in the energy resource sector: A cross country analysis," Resources Policy, Elsevier, vol. 81(C).
    6. Dietrich, Alexander M. & Kuester, Keith & Müller, Gernot J. & Schoenle, Raphael, 2022. "News and uncertainty about COVID-19: Survey evidence and short-run economic impact," Journal of Monetary Economics, Elsevier, vol. 129(S), pages 35-51.
    7. Deev, Oleg & Plíhal, Tomáš, 2022. "How to calm down the markets? The effects of COVID-19 economic policy responses on financial market uncertainty," Research in International Business and Finance, Elsevier, vol. 60(C).
    8. Débora De Esteban Escobar & Carmen De-Pablos-Heredero & José Luis Montes-Botella & Francisco José Blanco Jiménez & Antón García, 2022. "Business Incubators and Survival of Startups in Times of COVID-19," Sustainability, MDPI, vol. 14(4), pages 1-15, February.
    9. Aizenman, Joshua & Lindahl, Robert & Stenvall, David & Uddin, Gazi Salah, 2024. "Geopolitical shocks and commodity market dynamics: New evidence from the Russia-Ukraine conflict," European Journal of Political Economy, Elsevier, vol. 85(C).
    10. Martin Iseringhausen & Konstantinos Theodoridis, 2025. "A survey-based measure of asymmetric macroeconomic risk in the euro area," Working Papers 68, European Stability Mechanism, revised 11 Feb 2025.

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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