Expenditure, Sentiment, and Uncertainty: Identifying Shocks to Consumer Confidence Using Daily Data
The importance of consumer confidence in stimulating economic activity is a disputed issue in macroeconomics. Do changes in confidence represent an autonomous fluctuation in optimism, independent of information on economic fundamentals, or are they a reflection of economic news? The aim of this project is to understand whether consumer confidence contains information relevant to spending decisions that is not contained in other economic indicators. I answer this question by studying the dynamics of spending and confidence in a structural vector autoregressive model.
LABOR MARKET ISSUES