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Psychology, consumer sentiment and household expenditures: a disaggregated analysis

  • Marco Malgarini

    ()

    (ISAE - Institute for Studies and Economic Analyses)

  • Patrizia Margani

    ()

    (ISAE - Institute for Studies and Economic Analyses)

The aim of the paper is to assess the role of the Italian Consumer Sentiment Index (CSI) as an autonomous driving force of consumption decisions. We test for the presence of “rule of thumb” consumers as originally proposed by Campbell and Mankiw (1991), using sentiment measures distinguished by working condition of the household. Consumption data are disaggregated according to durability. The role of sentiment results to be stronger for service expenditures. Psychological motives of employees are found to have a particularly significant influence on consumption decisions. Moreover, CSI can not be explained by economic fundamentals alone, capturing also the effects of the political cycle and exceptional circumstances.

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File URL: http://lipari.istat.it/digibib/Working_Papers/WP_58_2005_Malgarini_Margani.pdf
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Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 58.

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Length: 31 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:isa:wpaper:58
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