News or animal spirits? Consumer confidence and economic activity: Redux

Sangyup Choi, Jaehun Jeong, Dohyeon Park and Donghoon Yoo ()

No 8/2023, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: Barsky and Sims (2012, AER) demonstrated, via indirect inference, that confidence innovations can be viewed as noisy signals about medium-term economic growth. They highlighted that the connection between confidence and subsequent activity, such as consumption and output, is primarily driven by news shocks about the future. We expand upon their research in two significant ways. First, we incorporate the Great Recession and ZLB episodes, and second, we employ unique state-level data to offer insights into how to interpret the relationship between consumer confidence and economic activity. Our results confirm the main finding of Barsky and Sims (2012) that this relationship is predominantly driven by news about the future.

Keywords: Consumer confidence; news; animal spirits; Great Recession; state-level analysis (search for similar items in EconPapers)
JEL-codes: E12 E21 E31 E32 E71 (search for similar items in EconPapers)
Date: 2023
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Related works:
Journal Article: News or animal spirits? Consumer confidence and economic activity: Redux (2024)
Working Paper: News or Animal Spirits? Consumer Confidence and Economic Activity: Redux (2024)
Working Paper: News or Animal Spirits? Consumer Confidence and Economic Activity: Redux (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:82023

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