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What matters for consumer sentiment? World oil price or retail gasoline price?

Author

Listed:
  • Sofronis Clerides

    (University of Cyprus, Cyprus; Rimini Centre for Economic Analysis)

  • Styliani-Iris Krokida

    (Athens University of Economics and Business, Greece)

  • Neophytos Lambertides

    (Cyprus University of Technology, Cyprus)

  • Dimitris Tsouknidis

    (Department of Maritime Studies, University of Piraeus, Greece)

Abstract

This paper examines the impact of oil supply and demand shocks on gasoline prices and consumer sentiment in the Euro Area. Results reveal that aggregate consumer sentiment and its components deteriorate notably as a response to positive shocks to real gasoline prices. On the contrary, positive oil-specific demand shocks do not trigger a deterioration of consumer sentiment. In other words, consumer sentiment is affected primarily by unexpected changes in gasoline prices at the pump rather than unexpected changes in crude oil prices. The analysis is further refined to analyze the effects of these shocks to six subcomponents of consumer sentiment.

Suggested Citation

  • Sofronis Clerides & Styliani-Iris Krokida & Neophytos Lambertides & Dimitris Tsouknidis, 2020. "What matters for consumer sentiment? World oil price or retail gasoline price?," Working Paper series 20-22, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:20-22
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    References listed on IDEAS

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    More about this item

    Keywords

    oil supply and demand shocks; gasoline prices; consumer sentiment; euro area;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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