Ravn, Morten;
Andresa, Lagerborg;
Evi, Pappa;
(2022)
Sentimental Business Cycles.
Review of Economic Studies
10.1093/restud/rdac053.
(In press).
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Abstract
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.
| Type: | Article |
|---|---|
| Title: | Sentimental Business Cycles |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1093/restud/rdac053 |
| Publisher version: | https://doi.org/10.1093/restud/rdac053 |
| Language: | English |
| Additional information: | © The Author(s) 2022. Published by Oxford University Press on behalf of The Review of Economic Studies Limited. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contactjournals.permissions@oup.com |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics UCL > Provost and Vice Provost Offices > UCL SLASH UCL |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10146210 |
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