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.
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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