Does sentiment explain consumption?

W. Anthony Bryant and Joseph Macri ()

Journal of Economics and Finance, 2005, vol. 29, issue 1, 97-110

Abstract: This paper examines whether “consumer sentiment,” an often neglected variable, explains consumption expenditures for Australia. Since household consumption accounts for more than 60 percent of U.S. GDP and a similar proportion in other developed economies, fluctuations in consumption may result in significant changes in the state of the economy. Therefore, we develop a theoretical model that suggests why consumer sentiment may influence consumption expenditures. Furthermore, using a carefully specified consumption function as the “test-bed,” we consider empirically whether there is an independent impact of sentiment on consumption. Our results suggest that consumer sentiment does influence variations in consumption expenditure. Copyright Springer 2005

Date: 2005
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Working Paper: Does Sentiment Explain Consumption? (2001)
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DOI: 10.1007/BF02761545

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