Sentimental Business Cycles

• 成果类型: Article
• 署名作者: Lagerborg, Andresa; Pappa, Evi; Ravn, Morten O.
• 署名单位: International Monetary Fund; Universidad Carlos III de Madrid; Centre for Economic Policy Research - UK; University of London; University College London
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac053
• 发表日期: 2023
• 页码: 1358-1393
• 关键词: income tax changes; consumer confidence; POLICY; news; COSTS; noise

摘要

We estimate the dynamic causal effects of consumer sentiment shocks in the US. We identify autonomous changes in survey evidence on consumer confidence using fatalities in mass shootings as an instrument. We find the instrument to be significant for an aggregate index of consumer expectations and also back up the identification scheme with micro evidence that exploits the geographical variation in mass shootings. Sentiment shocks have real macroeconomic effects. A negative sentiment shock is recessionary: It sets off a persistent decline in consumer confidence and induces a contraction in industrial production, private sector consumption and in the labour market, while having less evident nominal effects. Finally, sentiment shocks explain a non-negligible part of the cyclical fluctuations in consumer confidence and real macroeconomic aggregates.