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Consumer Confidence and Elections

  • Dimitrios D. Thomakos

    ()

    (University of Peloponnese, Greece and The Rimini Centre for Economics Analysis, Italy.)

  • Gikas A. Hardouvelis

    ()

    (University of Piraeus, Greece and CEPR)

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 macroeconomic 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 The Rimini Centre for Economic Analysis in its series Working Paper Series with number 42-07.

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Date of creation: Jul 2007
Date of revision: Jul 2007
Handle: RePEc:rim:rimwps:42-07
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  19. Thomas A. Garrett & Rubén Hernández-Murillo & Michael T. Owyang, 2005. "Does consumer sentiment predict regional consumption?," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 123-135.
  20. Rogoff, Kenneth & Sibert, Anne, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 1-16, January.
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