Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271051 
Year of Publication: 
2023
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 8/2023
Publisher: 
Bank of Finland, Helsinki
Abstract: 
Barsky and Sims (2012, AER) demonstrated, via indirect inference, that confidence innovations can be viewed as noisy signals about medium-term economic growth. They highlighted that the connection between confidence and subsequent activity, such as consumption and output, is primarily driven by news shocks about the future. We expand upon their research in two significant ways. First, we incorporate the Great Recession and ZLB episodes, and second, we employ unique state-level data to offer insights into how to interpret the relationship between consumer confidence and economic activity. Our results confirm the main finding of Barsky and Sims (2012) that this relationship is predominantly driven by news about the future.
Subjects: 
Consumer confidence
news
animal spirits
Great Recession
state-level analysis
JEL: 
E12
E21
E31
E32
E71
ISBN: 
978-952-323-437-6
Document Type: 
Working Paper

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