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Consumption, sentiment, and economic news

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Author Info
Martha Starr

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Abstract

This paper investigates the influence of economic news on consumer sentiment, and examines whether ‘news shocks’ –- changes in coverage that would not be expected from incoming data on economic fundamentals -– have aggregate effects. Using monthly U.S. data and a structural vector-autoregression, I find that (1) sentiment is affected by news shocks, (2) after filtering out effects of news shocks, shocks to sentiment still have positive effects on consumer spending, and (3) news shocks influence both spending and unemployment in significant, though transitory ways. These results are consistent with other evidence of a role of non-fundamental factors in aggregate fluctuations.

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File URL: http://www.american.edu/academic.depts/cas/econ/workingpapers/2008-16.pdf
File Format: application/pdf
File Function: First version, 2008
Download Restriction: no

Publisher Info
Paper provided by American University, Department of Economics in its series Working Papers with number 2008-16.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 30 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:amu:wpaper:1608

Contact details of provider:
Web page: http://www.american.edu/cas/economics/

For technical questions regarding this item, or to correct its listing, contact: (Thomas Meal).

Related research
Keywords: Consumption; consumer sentiment; economic news; aggregate fluctuations;

Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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This page was last updated on 2009-11-23.

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