Does wall street affect main street? examining potential spillovers from investor stock market sentiment to personal consumption expenditures

KhasadYahu ZarBabal () and Jocelyn Evans ()
Additional contact information
KhasadYahu ZarBabal: City University of New York
Jocelyn Evans: College of Charleston

Journal of Economics and Finance, 2018, vol. 42, issue 2, No 4, 293-314

Abstract: Abstract Investor sentiment rather than aggregate stock wealth predicts changes in non-durable consumer spending across different economic cycles above and beyond housing wealth, labor income, and other macro-economic factors. A statistically and economically significant positive contemporaneous relationship exists between investor sentiment and current nondurable spending, whereas sentiment negatively predicts later spending. Consumers adjust their spending patterns along with sentiment about the stock market, then reverse sentiment-based consumption smoothing when biased market expectations do not come to fruition. Investors’ biased beliefs about stock returns affect consumers purchasing decisions and, thus, the overall .

Keywords: Investor sentiment; Consumer spending (search for similar items in EconPapers)
JEL-codes: C53 G11 G12 G17 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s12197-017-9394-x Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:42:y:2018:i:2:d:10.1007_s12197-017-9394-x

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-017-9394-x

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().