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Animal spirits and household spending in Europe and the US

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  • Öztürk, B.
  • Stokman, A.C.J.

Abstract

We investigate whether consumer confidence has an independent effect on household spending. First, we determine a common set of factors that drive both consumer confidence and household spending. Next, we interpret the non-systematic residuals in the country consumer confidence equations as a proxy for animal spirits and include this proxy in the spending equations as an additional explanatory variable. Our results suggest that animal spirits exist and may have a considerable impact on spending growth in Europe and the US.

Suggested Citation

  • Öztürk, B. & Stokman, A.C.J., 2019. "Animal spirits and household spending in Europe and the US," Economics Letters, Elsevier, vol. 185(C).
    • Handle: RePEc:eee:ecolet:v:185:y:2019:i:c:s0165176519303477
    DOI: 10.1016/j.econlet.2019.108697
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    References listed on IDEAS

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    1. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
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    7. Robert B. Barsky & Eric R. Sims, 2012. "Information, Animal Spirits, and the Meaning of Innovations in Consumer Confidence," American Economic Review, American Economic Association, vol. 102(4), pages 1343-1377, June.
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    Cited by:

    1. Hector H. Sandoval & Anita N. Walsh, 2021. "The role of consumer confidence in forecasting consumption, evidence from Florida," Southern Economic Journal, John Wiley & Sons, vol. 88(2), pages 757-788, October.
    2. Hector H. Sandoval & Anita N. Walsh, 2024. "Sentiments and spending intentions: Evidence from Florida," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1046-1073, July.
    3. Zhang, Zhengfa & Keasey, Kevin & Lambrinoudakis, Costas & Mascia, Danilo V., 2024. "Consumer sentiment: The influence of social media," Economics Letters, Elsevier, vol. 237(C).
    4. Xu, Xin & Xu, Xiaoguang, 2023. "Monetary policy transmission modeling and policy responses," The North American Journal of Economics and Finance, Elsevier, vol. 64(C).

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    More about this item

    Keywords

    Animal spirits; Private consumption;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E71 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy

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