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On the Impact of COVID-19-Related Uncertainty

Marta Castellini    Università degli Studi di Brescia, Italia; Fondazione Eni Enrico Mattei, Milano, Italia    

Michael Donadelli    Università degli Studi di Brescia, Italia    

Ivan Gufler    Università Ca’ Foscari Venezia, Italia    

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abstract

COVID-19 has generated a substantial increase in the level of economic policy uncertainty (EPU) around the World. Recent empirical investigations suggest that the COVID-19 has played a key role in amplifying the overall level of political uncertainty. In Italy, where anti-COVID-19 measures were implemented with some delay and were badly communicated, EPU rose dramatically. We examine the implications of rising COVID-19-related uncertainty for company revenues, gross operating margin and employment in 16 different Italian sectors. Our findings indicate construction, education, manufacturing activities and hospitality as the most hit sectors, with an average short-term drop in company revenues of around 4% in annual terms and a recovery time of almost two years. Thus, COVID-19-related uncertainty is found to be a significant business cycle driver.

Published
July 31, 2020
Accepted
June 30, 2020
Submitted
June 3, 2020
Language
EN
ISBN (EBOOK)
978-88-6969-442-4

Keywords: Political uncertaintyRevenuesEmploymentNon-macro-related uncertaintyAmbiguityCOVID-19

Copyright: © 2020 Marta Castellini, Michael Donadelli, Ivan Gufler. This is an open-access work distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction is permitted, provided that the original author(s) and the copyright owner(s) are credited and that the original publication is cited, in accordance with accepted academic practice. The license allows for commercial use. No use, distribution or reproduction is permitted which does not comply with these terms.