The Stock Market and the Consumer Confidence Channel in Canada
AbstractThis paper provides new evidence on the relations between the stock market and consumer behavior in Canada. It differentiates between two channels of stock price transmission: a direct wealth channel that operates through changes in wealth and an indirect consumer confidence channel that affects consumption through changes in consumer optimism. The two channels are evaluated by testing the ability of stock prices to predict consumer confidence measures. The hypothesis that stock prices are transmitted only through the wealth channel is rejected at the national and regional levels. Furthermore, confidence measures respond more strongly to stock prices declines than to increases.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 10-08.
Length: 27 pages
Date of creation: 27 Sep 2010
Date of revision: 26 Aug 2011
Publication status: Published: Carleton Economic Papers
Contact details of provider:
Postal: 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada
Other versions of this item:
- Lilia Karnizova & Hashmat Khan, 2010. "The Stock Market and the Consumer Confidence Channel in Canada," Working Papers 1004E, University of Ottawa, Department of Economics.
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lise Pichette, 2004.
"Are Wealth Effects Important for Canada,"
Bank of Canada Review,
Bank of Canada, vol. 2004(Spring), pages 29-35.
- O. David Gulley & Jahangir Sultan, 1998. "Consumer confidence announcements: do they matter?," Applied Financial Economics, Taylor and Francis Journals, vol. 8(2), pages 155-166.
- 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.
- Jansen, W. Jos & Nahuis, Niek J., 2003. "The stock market and consumer confidence: European evidence," Economics Letters, Elsevier, vol. 79(1), pages 89-98, April.
- James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 99-118, Spring.
- Brozozowski, Matthew & Gervais, Martin & Klein, Paul & Suzuki, Micho, 2009.
"Consumption, income, and wealth inequality in Canada,"
Discussion Paper Series In Economics And Econometrics
0904, Economics Division, School of Social Sciences, University of Southampton.
- Matthew Brzozowski & Martin Gervais & Paul Klein & Michio Suzuki, 2010. "Consumption, Income, and Wealth Inequality in Canada," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 52-75, January.
- Flacco, Paul R & Parker, Randall E, 1992. "Income Uncertainty and the Onset of the Great Depression," Economic Inquiry, Western Economic Association International, vol. 30(1), pages 154-71, January.
- Emrah İ. Çevik & Turhan Korkmaz & Erdal Atukeren, 2012. "Business confidence and stock returns in the USA: a time-varying Markov regime-switching model," Applied Financial Economics, Taylor and Francis Journals, vol. 22(4), pages 299-312, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Renee Lortie).
If references are entirely missing, you can add them using this form.