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Consumer Confidence and Elections

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Author Info
Hardouvelis, Gikas A
Thomakos, Dimitrios D

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Abstract

We investigate the behavior of consumer confidence around national elections in the EU-15 countries during 1985:1-2007:3. Consumer confidence increases before the date of elections and falls subsequently by almost the same amount. It is able to predict the strength of the performance of the incumbent party and its probability of re-election both alone and in the presence of macro- economic and fiscal variables. The post-election drop is negatively related to the previous run up and is a function of the political - but not the economic - environment. A similar rise and fall characterizes consumer confidence in the United States.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6701.

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Date of creation: Feb 2008
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Handle: RePEc:cpr:ceprdp:6701

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Related research
Keywords: consumer confidence; EU-15; fiscal conditions; incumbent party; macro-economy; national elections; political business cycle; USA;

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Find related papers by JEL classification:
D7 - Microeconomics - - Analysis of Collective Decision-Making
E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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  2. Nicholas S. Souleles, 2001. "Consumer Sentiment: Its Rationality and Usefulness in Forecasting Expenditure - Evidence from the Michigan Micro Data," NBER Working Papers 8410, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Batchelor, Roy & Dua, Pami, 1998. "Improving macro-economic forecasts: The role of consumer confidence," International Journal of Forecasting, Elsevier, vol. 14(1), pages 71-81, March. [Downloadable!] (restricted)
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  7. Jordahl, Henrik, 2001. "An Economic Analysis of Voting in Sweden," Working Paper Series 2001:18, Uppsala University, Department of Economics. [Downloadable!]
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  8. Justin Wolfers & Eric Zitzewitz, 2006. "Five Open Questions About Prediction Markets," IZA Discussion Papers 1975, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," NBER Working Papers 10504, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Andrew Leigh & Justin Wolfers, 2006. "Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 325-340, 09. [Downloadable!] (restricted)
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  11. Christopher D. Carroll & Jeffrey C. Fuhrer & David W. Wilcox, 1991. "Does consumer sentiment affect household spending? If so why?," Finance and Economics Discussion Series 168, Board of Governors of the Federal Reserve System (U.S.).
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  13. Erik Snowberg & Justin Wolfers & Eric Zitzewitz, 2006. "Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections," IZA Discussion Papers 1996, Institute for the Study of Labor (IZA). [Downloadable!]
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  14. A. Galeotti & G. Salford, 2001. "Electoral Cycles: Do they really fit the Data?," Tinbergen Institute Discussion Papers 01-076/1, Tinbergen Institute. [Downloadable!]
  15. E. Philip Howrey, 2001. "The Predictive Power of the Index of Consumer Sentiment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(2001-1), pages 175-216. [Downloadable!]
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  17. Peltzman, Sam, 1987. "Economic Conditions and Gubernatorial Elections," American Economic Review, American Economic Association, vol. 77(2), pages 293-97, May. [Downloadable!] (restricted)
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  19. Justin Wolfers & Eric Zitzewitz, 2006. "Prediction Markets in Theory and Practice," IZA Discussion Papers 1991, Institute for the Study of Labor (IZA). [Downloadable!]
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  20. Stigler, George J, 1973. "General Economic Conditions and National Elections," American Economic Review, American Economic Association, vol. 63(2), pages 160-67, May. [Downloadable!] (restricted)
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