On the Impact of COVID-19-Related Uncertainty

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 un- certainty. 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, educa- tion, 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.