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News or Animal Spirits? Consumer Confidenceand and Economic Activity: Redux

Sangyup Choi, Jaehun Jeong (), Dohyeon Park () and Donghoon Yoo ()
Additional contact information
Jaehun Jeong: Department of Economics, Duke University, https://econ.duke.edu/
Dohyeon Park: School of Economics, Sogang University, https://econeng.sogang.ac.kr/econeng/econeng01_2.html

No 23-A002, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: Barsky and Sims (2012, AER) demonstrated, via indirect inference, that confidence in-novations can be viewed as noisy signals about medium-term economic growth. They high-lighted that the connection between confidence and subsequent activity, such as consumption and output, is primarily driven by news shocks about the future. We expand upon their research in two significant ways. First, we incorporate the Great Recession and ZLB episodes, and second, we employ unique state-level data to offer insights into how to interpret the relationship between consumer confidence and economic activity. Our results confirm the main finding of Barsky and Sims (2012) that this relationship is predominantly driven bynews about the future.

Pages: 34 pages
Date: 2023-04
New Economics Papers: this item is included in nep-inv
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