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Economic Discomfort and Consumer Sentiment

Author

Listed:
  • Michael C.

    () (Lovell Department of Economics, Wesleyan University)

  • Pao-Lin Tien

    (Board of Governors of the Federal Reserve System)

Abstract

This paper finds that the Economic Discomfort Index (aka "Misery Index"), defined by Arthur Okun as the sum of the unemployment rate plus the annual rate of inflation, provides a rough and read explanation of economic malaise as measured by the University of Michigan Index of Consumer Sentiment. A more precise explanation of Consumer Sentiment includes the rate of change in unemployment, the rate of change in the S&P and the growth rate of real GDP; but dummies indicating Presidents insignificant. Studying the determinants of Consumer Sentiments helps validate the procedure invoked by Okun for constructing his Economic Discomfort Index.

Suggested Citation

  • Michael C. & Pao-Lin Tien, 2000. "Economic Discomfort and Consumer Sentiment," Eastern Economic Journal, Eastern Economic Association, vol. 26(1), pages 1-8, Winter.
  • Handle: RePEc:eej:eeconj:v:26:y:2000:i:1:p:1-8
    as

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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume26/V26N1P1_8.pdf
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    Citations

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    Cited by:

    1. repec:spr:soinre:v:133:y:2017:i:1:d:10.1007_s11205-016-1348-8 is not listed on IDEAS
    2. Oliver Picek, 2017. "The "Magic Square" of Economic Policy measured by a Macroeconomic Performance Index," Working Papers 1702, New School for Social Research, Department of Economics.
    3. Filip Premik & Ewa Stanisławska, 2017. "The Impact of Inflation Expectations on Polish Consumers’ Spending and Saving," Eastern European Economics, Taylor & Francis Journals, vol. 55(1), pages 3-28, January.
    4. Néstor Gándelman & Rubén Hernández-Murillo, 2009. "The impact of inflation and unemployment on subjective personal and country evaluations," Review, Federal Reserve Bank of St. Louis, issue May, pages 107-126.
    5. Darren Grant, 2009. "What Makes a Good Economy? An Analysis of Survey Data," Working Papers 0909, Sam Houston State University, Department of Economics and International Business.
    6. Brigitte Desroches & Marc-André Gosselin, 2002. "The Usefulness of Consumer Confidence Indexes in the United States," Staff Working Papers 02-22, Bank of Canada.
    7. repec:kap:ejlwec:v:45:y:2018:i:1:d:10.1007_s10657-012-9327-2 is not listed on IDEAS
    8. Josefa Ramoni-Perazzi & Giampaolo Orlandoni-Merli, 2013. "El índice de miseria corregido por informalidad: una aplicación al caso de Venezuela," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, December.
    9. 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(1), pages 175-216.
    10. Roberto Golinelli & Giuseppe Parigi, 2003. "What is this thing called confidence? A comparative analysis of consumer confidence indices in eight major countries," Temi di discussione (Economic working papers) 484, Bank of Italy, Economic Research and International Relations Area.
    11. Ivan Roberts & John Simon, 2001. "What do Sentiment Surveys Measure?," RBA Research Discussion Papers rdp2001-09, Reserve Bank of Australia.
    12. Beja, Edsel, 2014. "Measuring economic ill-being: Evidence for the ‘Philippine Misery Index’," MPRA Paper 59772, University Library of Munich, Germany.

    More about this item

    Keywords

    Consumer;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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