Template-Type: ReDIF-Paper 1.0 
Title: International confidence spillovers and business cycles in small open economies
Author-Name: Michał Brzoza-Brzezina 
Author-Name: Jacek Kotłowski 
Abstract: The economic literature has for a long time been looking for explanations of a verystrong international correlation of business cycles. This paper shows empirically thatcommon fluctuations can to some degree be the effect of confidence shocks beeingtransmitted internationally. We focus on a large (euro area) and a small, nearby economy (Poland). Our results show that euro area confidence fluctuations accountfor approximately 40-70% of business cycle fluctuations both in the euro area and in Poland. More importantly, their transmission happens not only via traditional channels (e.g. by confidence affecting euro area GDP and then Polish GDP via trade), but to alarge extent occurs directly (e.g. by news spreading via media).
Number: 2020-049
Length: 34 pages 
Creation-Date: 2020-05
Keywords: international spillovers, animal spirits, sentiments, business cycle
Classification-JEL: C32, E32, F44
File-URL: https://hdl.handle.net/20.500.12182/1138
File-Format: Application/pdf
DOI: 10.33119/kaewps2020049
Handle: RePEc:sgh:kaewps:2020049