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Animal spirits and household spending in Europe and the US

B. Öztürk and Ad Stokman ()

Economics Letters, 2019, vol. 185, issue C

Abstract: We investigate whether consumer confidence has an independent effect on household spending. First, we determine a common set of factors that drive both consumer confidence and household spending. Next, we interpret the non-systematic residuals in the country consumer confidence equations as a proxy for animal spirits and include this proxy in the spending equations as an additional explanatory variable. Our results suggest that animal spirits exist and may have a considerable impact on spending growth in Europe and the US.

Keywords: Animal spirits; Private consumption (search for similar items in EconPapers)
JEL-codes: E21 E71 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.econlet.2019.108697

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