Propagation of Economic Shocks: Macro- and Microeconomic Evidence for the European Union

The financial crisis and the European Sovereign debt crisis have highlighted the danger of contagion in the European financial markets. Over the last couple of years, the economics profession has devoted extensive research efforts to this problem and already proposed a series of policy measures that aim to prevent potential contagion effects. At the same time systematic investigations into the transmission of shocks in the real economy are almost missing, especially with regard to the firm-level perspective. This project aims at filling this gap by focusing on the role of business sentiments and their transmission within the boundaries of the EU. Based on data from European business surveys we create new data sets at the country, industry and firm level in order to provide detailed and systematic evidence on the propagation of business sentiments across Europe and their impact on country and industry growth as well as for (net) job creation at the firm level.