IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The determinants of consumer confidence: the case of United States and Belgium

  • BELTRAN, Helena
  • DURRE, Alain

The paper is dealing with the controversial question of the potential impact of stock market fluctuations on consumer confidence. In the last few years, this confidence index has gained importance in business cycle analysis and empirical evidence has shown its explanatory power in forecasting consumption along with standard macroeconomic variables. Meanwhile, numerous interpretations of its fluctuations arose, and few were based on a solid argumentation. Therefore, we propose in this paper to determine which elements are actually driving the confidence index. Using the standard error-correction mechanism model and non-linear methods, we analyze the relationship between the confidence index and several economic variables, over the period ranging from January 1983 to December 2001. As a growing number of economic observers claim the stock market fluctuations have a strong impact on consumer confidence, we especially focus on this potential impact. The models are estimated for the United States and for Belgium for which the importance of equities in the households net wealth is quite different. We find in particular that stock market fluctuations have explanatory power in the evolution of consumer confidence in the United States, especially since the beginning of the nineties.

If 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.

File URL: http://alfresco.uclouvain.be/alfresco/download/attach/workspace/SpacesStore/8d95e2d4-6204-461e-a543-c8471daf0fb4/coredp_2003_53.pdf
Download Restriction: no

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2003053.

as
in new window

Length:
Date of creation: 00 Jul 2003
Date of revision:
Handle: RePEc:cor:louvco:2003053
Contact details of provider: Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Phone: 32(10)474321
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Sydney Ludvigson & Charles Steindel, 1998. "How important is the stock market effect on consumption?," Research Paper 9821, Federal Reserve Bank of New York.
  2. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
  3. Jason Bram & Sydney Ludvigson, 1997. "Does consumer confidence forecast household expenditure?: A sentiment index horse race," Research Paper 9708, Federal Reserve Bank of New York.
  4. James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 99-118, Spring.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2003053. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.