Industrial production and Confidence after the crisis: what's going on?
The paper provides new evidence on possible structural breaks in the relationship among business Confidence and industrial activity in Europe in the aftermath of the recession. Possible interpretation is that the crisis has determined a change in the pattern of response in surveys, firms now incorporating a lower level of long term output. A confirmation comes from the analysis of survey data on capacity utilisation: we find indeed that perceived potential output or potential output growth has declined throughout the euro area. Results may be rather important for business cycle analysts and policy makers: for the former, the suggestion is to consider business survey data with particular care, since their interpretation has changed as a consequence of the crisis. Policy makers on the other hand should consider that the recession has changed long term expectations of agents, possibly significantly affecting transmission channels of both monetary and fiscal policies.
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- Cesaroni, Tatiana & Maccini, Louis & Malgarini, Marco, 2011.
"Business cycle stylized facts and inventory behaviour: New evidence for the Euro area,"
International Journal of Production Economics,
Elsevier, vol. 133(1), pages 12-24, September.
- Tatiana Cesaroni & Louis Maccini & Marco Malgarini, 2009. "Business cycle volatility and inventories behavior:new evidence for the Euro Area," ISAE Working Papers 108, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- Don Harding & Adrian Pagan, 2000.
"Disecting the Cycle: A Methodological Investigation,"
Econometric Society World Congress 2000 Contributed Papers
1164, Econometric Society.
- Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
- M. Hashem Pesaran & Martin Weale, 2005.
CESifo Working Paper Series
1599, CESifo Group Munich.
- Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
- Marco Malgarini & Antonio Paradiso, 2012. "Measuring capacity utilisation in the italian manufacturing sector: a comparison between time series and survey estimates," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2012(2), pages 5-19.
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