Journal of Business Cycle Research

, Volume 13, Issue 2, pp 225–251 | Cite as

Sentiment and Uncertainty Fluctuations and Their Effects on the Euro Area Business Cycle

Research Paper
First Online:
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Abstract

This is paper considers the role of economic sentiment and economic uncertainty in explaining economic adjustment in the Euro area during the Financial Crisis and Great Recession. The analysis is based on VAR models of economic activity, sentiment and uncertainty in four sectors—industry, retail, services and construction. Evidence is found that sentiment and uncertainty have non-negligible effects on economic activity. Finally also some additional evidence is provided by studying the two largest Euro area countries: Germany and France.

Keywords

Sentiment Uncertainty Ambiguity Business cycle Euro area 

JEL Classification

C32 C83 D84 E23 
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Notes

Acknowledgements

We are grateful to two anonymous referees for their pertinent suggestions on several issues. Seminar participants at the 2016 Research on Money in the Economy (ROME) conference, Duesseldorf University, the 2017 EEFS Workshop Financial Econometrics at Bochum University and the 2017 ERMEES Macroeconomics Workshop at the University of Strasbourg also provided valuable feedback.

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Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  1. 1.Leuven Center for Irish StudiesKU LeuvenLouvainBelgium
  2. 2.Department of ECON-CEDONKU LeuvenBrusselsBelgium

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