Does confidence matter for economic growth? An analysis from the perspective of policy effectiveness

Guo, Yumei; He, Shan

doi:10.1016/j.iref.2020.04.012

Cited by 14 publications

(17 citation statements)

References 24 publications

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“…According to Guo and He (2020), when agents feel more optimistic they tend to decrease their preventive savings and become more aggressive in consumption and investment. As a result, the economy improves through optimistic behavior.…”

Section: Resultsmentioning

confidence: 99%

“…Ilut and Saijo (2021) indicated that a lack of confidence can discourage economic activities and lead the economy into a recession. Guo and He (2020) highlight that when agents have pessimistic expectations, they can adopt conservative behaviors in consumption and investment, making the economy more sensitive Sentiment and economic activity in Brazil to changes in confidence. In addition, these negative shocks seem to ratify the idea that only information processed long enough has the expected impact.…”

Section: Sentiment and Economic Activity In Brazilmentioning

confidence: 99%

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Sentiment and economic activity in Brazil

Marschner

Ceretta

2023

REGE

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PurposeThe purpose of this study is to analyze how sentiment affects economic activity in Brazil.Design/methodology/approachBased on a nonlinear autoregressive distributed lag (NARDL) model, this study examines in detail the short-term and long-term asymmetric impacts between the variables during the period from January 2007 to December 2020.FindingsThere are three main results of this study. First, sentiment is an important factor for economic activity in Brazil, and its effect possibly occurs through the channels of consumption and investment, which are the two main components of economic growth. Second, sentiment affects economic activity in different ways in the short and the long term: in Brazil, although in the short-term, immediate shocks of sentiment may be confusing, the negative shocks from previous periods have a negative impact on economic activity. Third, the effect of shocks of optimism and pessimism on economic activity is asymmetric, and in the long run, only shocks of optimism have a significant and positive impact.Originality/valueThe relationship between sentiment and economic activity is still a controversial issue in the literature and this study seeks to advance its understanding in Brazil.

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Section: Resultsmentioning

confidence: 99%

Section: Sentiment and Economic Activity In Brazilmentioning

confidence: 99%

Sentiment and economic activity in Brazil

Marschner

Ceretta

2023

REGE

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“…Some studies apply consumer confidence (or sentiment) to analyze macroeconomic activities, such as household decisions on debt and savings [39]; consumer spending, business cycles and economic growth [10,[40][41][42][43][44][45][46][47], financial stability [48,49], and tourism demand [50]. For example, Acemoglu and Scott [10] apply the consumption capital asset pricing model (CAPM) to U.K. data and show that consumer confidence has forecasting ability for the level of consumption.…”

Section: Literature Reviewmentioning

confidence: 99%

Spillover Network among Economic Sentiment and Economic Policy Uncertainty in Europe

Hernández

Kang

Jiang

et al. 2022

Systems

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We explore the directional spillover network among economic sentiment indicators and the economic policy uncertainty (EPU) index from Europe. We derive our results by fitting the directional spillover index approach to the monthly frequency data of eleven European countries, economic sentiment indicators and the European EPU index, spanning from 1 January 1987, to 1 February 2019. The empirical results indicate that the economic sentiment indicators of the largest European economies (Germany, France, and Italy) spillover with each other the most. The economic sentiment indicators of Germany and France most strongly influence the EU and Euro area economic sentiment indicators. The economic sentiment indicators of France and Italy have the most influence on the European EPU index, while the latter has the strongest influence on the economic sentiment indicators of Germany and France.

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“…Consumer confidence is a crucial factor explaining households’ aggregate consumption (e.g., Gillitzer and Prasad 2018 ; Fuhrer 1993 ; Acemoglu and Scott 1994 ; Hemming et al 2002 ), households’ savings and investment (Vanlaer et al 2020 ; Mishkin 1978 ; Hemming et al 2002 ), household financial decisions (Białowolski 2019 ), economic growth (Matsusaka and Sbordone 1995 ; Guo and He 2020 ), productivity (Barsky and Sims 2012 ), and a variety of political behavior such as trust in government (Chanley et al 2000 ) and voters’ support for government (Indridason 2014 ). Bachman and Sims ( 2012 ) argue that household confidence plays a crucial role in the transmission of government spending shocks into economic activity.…”

Section: Introductionmentioning

confidence: 99%

Governments’ economic support for households during the COVID-19 pandemic and consumer confidence

2023

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To combat the adverse consequences of the COVID-19 pandemic, governments have implemented various economic policies. This study examines how different types of government economic support for households are associated with consumer confidence. Utilizing data from 35 countries in the Organization for Economic Co-operation and Development for January 2020–October 2021 and applying panel fixed effect and system generalized methods of moments regressions, we show that higher levels of government economic support lead to higher levels of consumer confidence. The results also suggest that government income support for households has a stronger impact than debt/contract relief on consumer confidence during the pandemic in the full sample. Moreover, we find that debt/contract relief is a more effective policy to boost confidence in emerging economies. Finally, COVID-19 fatalities have a significant negative effect on consumer confidence.

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Does confidence matter for economic growth? An analysis from the perspective of policy effectiveness

Cited by 14 publications

References 24 publications

Sentiment and economic activity in Brazil

Sentiment and economic activity in Brazil

Spillover Network among Economic Sentiment and Economic Policy Uncertainty in Europe

Governments’ economic support for households during the COVID-19 pandemic and consumer confidence

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