The stock market and consumer confidence: European evidence
AbstractThis paper studies the (short-run) relationship between stock market developments and consumer confidence in eleven European countries over the years 1986-2001. We find that stock returns and changes in sentiment are positively correlated for nine countries, with Germany as the main exception. Moreover, stock returns generally Granger-cause consumer confidence at very short horizons (two weeks to one month), but not vice versa. The stock market-confidence relationship is driven by expectations about economy-wide conditions rather than personal finances. This suggests that the confidence channel is not part of the conventional wealth effect, but a separate transmission channel.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 79 (2003)
Issue (Month): 1 (April)
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Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- W. Jos Jansen & Niek J. Nahuis, 2002. "The Stock Market and Consumer Confidence: European Evidence," MEB Series (discontinued) 2002-11, Netherlands Central Bank, Monetary and Economic Policy Department.
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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