Economic Discomfort and Consumer Sentiment
AbstractThis paper finds that the Economic Discomfort Index (aka "Misery Index"), defined by Arthur Okun as the sum of the unemployment rate plus the annual rate of inflation, provides a rough and read explanation of economic malaise as measured by the University of Michigan Index of Consumer Sentiment. A more precise explanation of Consumer Sentiment includes the rate of change in unemployment, the rate of change in the S&P and the growth rate of real GDP; but dummies indicating Presidents insignificant. Studying the determinants of Consumer Sentiments helps validate the procedure invoked by Okun for constructing his Economic Discomfort Index.
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Bibliographic InfoArticle provided by Eastern Economic Association in its journal Eastern Economic Journal.
Volume (Year): 26 (2000)
Issue (Month): 1 (Winter)
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- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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- Darren Grant, 2009. "What Makes a Good Economy? An Analysis of Survey Data," Working Papers 0909, Sam Houston State University, Department of Economics and International Business.
- Brigitte Desroches & Marc-André Gosselin, 2002. "The Usefulness of Consumer Confidence Indexes in the United States," Working Papers 02-22, Bank of Canada.
- Roberto Golinelli & Giuseppe Parigi, 2003. "What is this thing called confidence? A comparative analysis of consumer confidence indices in eight major countries," Temi di discussione (Economic working papers) 484, Bank of Italy, Economic Research and International Relations Area.
- Néstor Gándelman & Rubén Hernández-Murillo, 2009. "The impact of inflation and unemployment on subjective personal and country evaluations," Review, Federal Reserve Bank of St. Louis, issue May, pages 107-126.
- Ivan Roberts & John Simon, 2001. "What do Sentiment Surveys Measure?," RBA Research Discussion Papers rdp2001-09, Reserve Bank of Australia.
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