Journal of Business Cycle Research

, Volume 15, Issue 1, pp 1–24 | Cite as

Inspecting the Relationship Between Business Confidence and Industrial Production: Evidence on Italian Survey Data

  • G. Bruno
  • L. Crosilla
  • P. MarganiEmail author
Research Paper


The aim of this paper is to investigate the relationship between the manufacturing confidence indicator (CI) and the industrial production index (IPI) as well as to address the effects of the “Great Recession” on this relation. Some stylized facts about CI are firstly presented and the stability of the relationship in the framework of a linear model is subsequently explored. In addition, the findings are tested to be robust with respect to a “sample selection” effect in survey data and also to the hypothesis that they may suggest a change in the long-term trends in the industrial activity. The empirical evidence shows that: (1) the change in the relationship may be due to some cyclical reasons, rather than structural ones; (2) the performance of CI is not affected by the different permanence of firms in the panel; (3) agents are likely to adjust their production plans during the financial crisis, considering a new lower benchmark for their industrial activity in the long term. In particular, as the capacity utilization that managers consider as “ideal/sufficient” is proven to be changed over time, this finding may be consistent with the presence of non-linearities in the relation between CI and IPI.


Survey data Industrial production index Non-linear relationship Capacity utilization 

JEL Classification

C22 E32 L60 


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© Springer Nature Switzerland AG 2018

Authors and Affiliations

  1. 1.ISTATRomeItaly

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