 On the dynamics of U.S. consumer sentiment and economic policy assessmentHamid Baghestani and Polly Palmer Applied Economics, 2017, vol. 49, issue 3, 227-237 Abstract: We utilize the Michigan Surveys of Consumers data to first investigate the dynamic relationship between consumers’ assessment of current and future economic conditions (Index of Current Economic Conditions (ICC) and Index of Consumer Expectations (ICE)), and then examine how these assessments are influenced by deterioration/improvement in consumers’ appraisal of economic policies of the government (GP). We further assess how deterioration/improvement in ICC and ICE influences GP. For 1978–2015, our findings first indicate that ICC and ICE are cointegrated and both respond to disequilibrium to restore the long-run equilibrium relationship. Second, deterioration in GP results in deterioration in both ICC and ICE. Improvement in GP, however, results in improvement in ICE with no impact on ICC. Third, deterioration in both ICC and ICE results in deterioration in GP. Improvement in ICE results in improvement in GP, but improvement in ICC has no impact on GP. The observed asymmetries are in line with ‘negativity bias’, whereby people tend to give more weight to negative events than to positive ones. Date: 2017 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:49:y:2017:i:3:p:227-237 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2016.1194964 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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