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Economic activity and financial markets: the case of air travel in COVID-19 pandemic

Author

Listed:
  • Xiaoyang Wang

    (University of New Mexico - Albuquerque)

  • Peimin Chen

    (Shanghai Business School)

  • Jianhe Liu

    (Zhejiang University of Finance & Economics (ZUFE))

Abstract

We investigate the co-movements of real economic activity with COVID-19 cases, crude oil and financial markets using the case of US airline industry. The pairwise relationships are examined through wavelet coherence method. Results show that air travel activity positively leads COVID-19 infections in the 4-8 days scales. But it has no consistent relationship with crude oil or financial markets. The findings connect the literature in the nexus of real economic activity, COVID-19 infections and financial markets. A policy implication is that, despite dampening real economic activities, restrictive policies to curb the pandemic may pose limited impact on financial markets if coupled with stimulus policies.

Suggested Citation

  • Xiaoyang Wang & Peimin Chen & Jianhe Liu, 2021. "Economic activity and financial markets: the case of air travel in COVID-19 pandemic," Economics Bulletin, AccessEcon, vol. 41(3), pages 2116-2126.
    • Handle: RePEc:ebl:ecbull:eb-21-00462
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    More about this item

    Keywords

    COVID-19; economic activity; financial markets; wavelet coherence;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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