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Consumer Confidence and Elections

Author

Listed:
  • Gikas A. Hardouvelis

    (University of Piraeus, Greece and CEPR)

  • Dimitrios D. Thomakos

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

Abstract
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.

Suggested Citation

  • Gikas A. Hardouvelis & Dimitrios D. Thomakos, 2007. "Consumer Confidence and Elections," Working Paper series 42_07, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:42_07
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    More about this item

    Keywords

    consumer confidence; national elections; incumbent party; macro-economy; fiscal conditions; political business cycle; EU-15; USA;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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