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Consumer Confidence and the Unemployment Rate in New York State: A Panel Study

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  • Arindam Mandal
  • Joseph McCollum

Abstract

This paper explores the short-term and long-run relationship between the unemployment rate and the consumer confidence index in five metropolitan statistical areas (MSAs) of New York State. The paper utilizes a unique dataset collected by the Siena Research Institute (SRI) between 2001 and 2010. We use panel cointegration and panel error-correction models (ECM) to explore the causal relationship between these two variables. The short-run coefficients indicate a negative causality from consumer sentiment to unemployment and vice versa, indicating that unemployment and consumer sentiment reinforce each other in the short run. In the long-run, we find significant negative causality from consumer confidence to unemployment. However, the direction of causality from unemployment to consumer confidence is not significant.

Suggested Citation

  • Arindam Mandal & Joseph McCollum, 2013. "Consumer Confidence and the Unemployment Rate in New York State: A Panel Study," New York Economic Review, New York State Economics Association (NYSEA), vol. 44(1), pages 3-19.
    • Handle: RePEc:nye:nyervw:v:44:y:2013:i:1:p:3-19
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