The Impact of Pessimistic Expectations on the Effects of COVID‐19‐Induced Uncertainty in the Euro Area*

Pellegrino, Giovanni; Ravenna, Federico; Züllig, Gabriel

doi:10.1111/obes.12431

Cited by 23 publications

(16 citation statements)

References 82 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…They …nd that, in a conservative case of a shock lasting three months, industrial production is expected to fall by 12.75% in 2020. Pellegrino, Ravenna, and Züllig (2020) use a nonlinear VAR to account for the role played by agents'expectations. They quantify the impact of an uncertainty shock calibrated to match the jump in …nancial volatility observed in March 2020 conditional on very negative expectations about the future economic outlook, and …nd that industrial production will experience a drop in between 15% and 19% by the end of 2020.…”

Section: Related Literaturementioning

confidence: 99%

Uncertainty and Monetary Policy During Extreme Events

2020

Self Cite

View full text Add to dashboard Cite

How damaging are uncertainty shocks during extreme events such as the great recession and the Covid-19 outbreak? Can monetary policy limit output losses in such situations? We use a nonlinear VAR framework to document the large response of real activity to a financial uncertainty shock during the great recession. We replicate this evidence with an estimated DSGE framework featuring a concept of uncertainty comparable to that in our VAR. We employ the DSGE model to quantify the impact on real activity of an uncertainty shock under different Taylor rules estimated with normal times vs. great recession data (the latter associated with a stronger response to output). We find that the uncertainty shock-induced output loss experienced during the 2007-09 recession could have been twice as large if policymakers had not responded aggressively to the abrupt drop in output in 2008Q3. Finally, we use our estimated DSGE framework to simulate different paths of uncertainty associated to different hypothesis on the evolution of the coronavirus pandemic. We find that: i) Covid-19-induced uncertainty could lead to an output loss twice as large as that of the great recession; ii) aggressive monetary policy moves could reduce such loss by about 50%.

show abstract

Section: Related Literaturementioning

confidence: 99%

Uncertainty and Monetary Policy During Extreme Events

2020

Self Cite

View full text Add to dashboard Cite

show abstract

“…The context that has spread to many nations of the world has been new and unfamiliar. In this situation of uncertainty, constant change, and waiting for normality to return, people have to adapt to a new rhythm of life and behavior rules designed to prevent it (Pellegrino et al,2020). This pandemic has also exerted profound psychological implications such as worry, fear, anxiety, anguish, sadness, boredom, and disorientation (Azim et al,2020;Wang et al, 2020b).…”

Section: Introductionmentioning

confidence: 99%

A region-wide survey on emotional and psychological impacts of COVID-19 on public transport choices in Sicily, Italy

Campisia¹,

Basbasb²,

Al-Rashid³

et al. 2022

ToTS

View full text Add to dashboard Cite

Public transport generally addresses the evident mobility needs and offers an often-irreplaceable service, especially for captive users and other disadvantaged population groups. Public transport design and services are closely related to the physical size of modern cities, the number of people living or working in them, and the distribution and organization of work and social activities. However, public transport has been restricted with the spread of the COVID-19 pandemic in Italy, since March 2020. Public transport demand collapsed, especially during the lockdown period (March-May 2020), and adverse effects were reported even in the subsequent periods. In fact, the social distancing restrictions have highlighted numerous problems with public transport systems worldwide, primarily due to two factors. The first is related to the spread of the virus via the respiratory route, which is more likely to infect in restricted areas, and the second is associated with a transport system that by definition has high occupancy rates and low spacing throughout the journey (e.g., the positioning of seats or standing places in a train or bus). Thus, the COVID-19 pandemic has substantially impacted the travel choices of users. The pandemic has also negatively affected the psychological state, generating specific problems of anxiety, fear, or stress among all population groups, even when choosing the means of transport to travel with.Given the emerging pandemic challenges, the present study examines the public transport demand characteristics during the various phases of the COVID-19 pandemic in Sicily, one of the most affected regions in Italy. The study investigates the mental state of a population sample that frequently used the local urban or regional public transport to travel to work before and during the pandemic phases in the Sicilian territory. Through the administration of an online survey, it was possible to collect sociodemographic and psychological data to understand the propensity to use public transport. A series of inferential statistical tests were applied to assess the correlation of psychological aspects (i.e., fear, anxiety, and stress) with socio-demographic variables and modal choice habits (trip frequency). Results highlight and evaluate each psychological issue among population groups and their relative role in shaping public transport-related preferences. The study highlights some proposals and their implementation strategies to prevent negative emotions and encourage public transport use in Sicily and generally.

show abstract

“…Second, we contribute to the literature that analyses the current pandemic under the lens of structural uncertainty shocks, e.g. Baker et al (2020c) , Ludvigson et al (2020) , Cox et al (2020) , Dietrich et al (2020) , Caggiano et al (2020) , Pellegrino et al (2021) and subsequent contributions. The closest contributions to our paper can be found in Baker et al (2020b) and Altig et al (2020) .…”

Section: Introductionmentioning

confidence: 99%

COVID-19-induced shocks and uncertainty

Miescu

Rossi

2021

European Economic Review

View full text Add to dashboard Cite

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.

show abstract

The Impact of Pessimistic Expectations on the Effects of COVID‐19‐Induced Uncertainty in the Euro Area*

Cited by 23 publications

References 82 publications

Uncertainty and Monetary Policy During Extreme Events

Uncertainty and Monetary Policy During Extreme Events

A region-wide survey on emotional and psychological impacts of COVID-19 on public transport choices in Sicily, Italy

COVID-19-induced shocks and uncertainty

Contact Info

Product

Resources

About