How to interpret consumer confidence shocks? State-level evidence

Sangyup Choi, Jaehun Jeong and Donghoon Yoo ()

Economics Letters, 2024, vol. 244, issue C

Abstract: Using novel quarterly data of 29 U.S. states from 2005:I to 2015:IV, we revisit the link between consumer confidence and economic activity. We find that an innovation in consumer confidence is followed by a significant and persistent increase in consumption and output but a temporary decline in inflation. These findings suggest that the supply-side (news) interpretation of consumer confidence receives more empirical support than the demand-side (animal spirit) interpretation in our sample.

Keywords: Consumer confidence; State-level analysis; Panel VARs; Great recession; News shock (search for similar items in EconPapers)
JEL-codes: E12 E21 E31 E32 E71 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524004695

DOI: 10.1016/j.econlet.2024.111985

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