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Consumer sentiment and business cycles: a Neimark-Sacker bifurcation scenario

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  • Frank Westerhoff

Abstract

We seek to demonstrate that consumer sentiment may create fluctuations in economic activity. Our nonlinear discrete-time model possesses, for instance, a Neimark-Sacker bifurcation, after which a stable steady state is replaced by (quasi-)periodic motion. Countercyclical interventions to stabilize the economy may even produce complex (chaotic) business cycles.

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  • Frank Westerhoff, 2008. "Consumer sentiment and business cycles: a Neimark-Sacker bifurcation scenario," Applied Economics Letters, Taylor & Francis Journals, vol. 15(15), pages 1201-1205.
    • Handle: RePEc:taf:apeclt:v:15:y:2008:i:15:p:1201-1205
    DOI: 10.1080/13504850600993705
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    References listed on IDEAS

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    1. Souleles, Nicholas S, 2004. "Expectations, Heterogeneous Forecast Errors, and Consumption: Micro Evidence from the Michigan Consumer Sentiment Surveys," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(1), pages 39-72, February.
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    Cited by:

    1. Roos, Michael W. M., 2015. "The macroeconomics of radical uncertainty," Ruhr Economic Papers 592, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Thomas M. Bury & Daniel Dylewsky & Chris T. Bauch & Madhur Anand & Leon Glass & Alvin Shrier & Gil Bub, 2023. "Predicting discrete-time bifurcations with deep learning," Nature Communications, Nature, vol. 14(1), pages 1-10, December.
    3. Luca Zanin, 2010. "The relationship between changes in the Economic Sentiment Indicator and real GDP growth: a time-varying coefficient approach," Economics Bulletin, AccessEcon, vol. 30(1), pages 837-846.
    4. Edward M Feasel & Nobuyuki Kanazawa, 2013. "Sentiment toward Trading Partners and International Trade," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(3), pages 309-327.
    5. Grigorescu Adriana & Oprisan Oana & Condrea Elena, 2017. "Other economico-social factors of the saving process," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 8(2), pages 41-48, August.

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