IDEAS home Printed from https://ideas.repec.org/a/aea/aejmac/v10y2018i4p234-69.html
   My bibliography  Save this article

The Effect of Consumer Sentiment on Consumption: Cross-Sectional Evidence from Elections

Author

Listed:
  • Christian Gillitzer
  • Nalini Prasad

Abstract

We seek to identify the causal effect of sentiment innovations on consumption. Using unique Australian consumer sentiment survey data we show that, immediately after elections with a change of government, supporters of the winning party report substantially more optimistic beliefs about economic conditions than supporters of the losing party. We argue that this variation in beliefs is orthogonal to changes in fundamentals and find robust evidence that the shifts in sentiment affect spending intentions. Furthermore, using geographic variation in sentiment, vote-shares and automobile purchases we find evidence that stated spending intentions are indicative of actual spending.

Suggested Citation

  • Christian Gillitzer & Nalini Prasad, 2018. "The Effect of Consumer Sentiment on Consumption: Cross-Sectional Evidence from Elections," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(4), pages 234-269, October.
    • Handle: RePEc:aea:aejmac:v:10:y:2018:i:4:p:234-69
    Note: DOI: 10.1257/mac.20160244
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/mac.20160244
    Download Restriction: no
    File URL: https://www.aeaweb.org/content/file?id=8047
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=MlWzckS2fY6bpP-zNHjZdBrfbHKL2-XB
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=0UKgRZ7yOYgs2S-ktslKdYAlsx7-FvH1
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmac:v:10:y:2018:i:4:p:234-69. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.