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Xiaoyang Wang, Peimin Chen and Jianhe Liu
''Economic activity and financial markets: the case of air travel in COVID-19 pandemic''
( 2021, Vol. 41 No.3 )
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.
Keywords: COVID-19, economic activity, financial markets, wavelet coherence
JEL: G1 - General Financial Markets
Manuscript Received : May 18 2021 Manuscript Accepted : Sep 18 2021

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