  This paper evaluates the dynamic response of economic activity to shocks in
uncertainty as percieved by agents.The study focuses on the comparison between
the perception of economic uncertainty by manufacturers and consumers.Since
uncertainty is not directly observable, we approximate it using the geometric
discrepancy indicator of Claveria et al.(2019).This approach allows us
quantifying the proportion of disagreement in business and consumer
expectations of eleven European countries and the Euro Area.First, we compute
three independent indices of discrepancy corresponding to three dimensions of
uncertainty (economic, inflation and employment) and we average them to obtain
aggregate disagreement measures for businesses and for consumers.Next, we use a
bivariate Bayesian vector autoregressive framework to estimate the impulse
response functions to innovations in disagreement in every country.We find that
the effect on economic activity of shocks to the perception of uncertainty
differ markedly between manufacturers and consumers.On the one hand, shocks to
consumer discrepancy tend to be of greater magnitude and duration than those to
manufacturer discrepancy.On the other hand, innovations in disagreement between
the two collectives have an opposite effect on economic activity:shocks to
manufacturer discrepancy lead to a decrease in economic activity, as opposed to
shocks to consumer discrepancy.This finding is of particular relevance to
researchers when using cross-sectional dispersion of survey-based expectations,
since the effect on economic growth of shocks to disagreement depend on the
type of agent.
