What Matters for Consumer Sentiment? World Oil Price or Retail Gasoline Price?

21 Pages Posted: 22 Jun 2020

See all articles by Sofronis Clerides

Sofronis Clerides

University of Cyprus; Centre for Economic Policy Research (CEPR); University of Bologna - Rimini Center for Economic Analysis (RCEA)

Styliani Iris Krokida

Cyprus University of Technology

Neophytos Lambertides

Cyprus University of Technology

Dimitris A. Tsouknidis

University of Piraeus - Department of Maritime Studies

Date Written: May 27, 2020

Abstract

This paper examines the impact of oil supply and demand shocks on gasoline prices and consumer sentiment in the Euro Area. Results reveal that aggregate consumer sentiment and its components deteriorate notably as a response to positive shocks to real gasoline prices. On the contrary, positive oil-specific demand shocks do not trigger a deterioration of consumer sentiment. In other words, consumer sentiment is affected primarily by unexpected changes in gasoline prices at the pump rather than unexpected changes in crude oil prices. The analysis is further refined to analyze the effects of these shocks to six sub-components of consumer sentiment.

Keywords: oil supply and demand shocks; gasoline prices; consumer sentiment; euro area

JEL Classification: G10; G11; G12; G14

Suggested Citation

Clerides, Sofronis and Krokida, Styliani-Iris and Lambertides, Neophytos and Tsouknidis, Dimitris A., What Matters for Consumer Sentiment? World Oil Price or Retail Gasoline Price? (May 27, 2020). Available at SSRN: https://ssrn.com/abstract=3611619 or http://dx.doi.org/10.2139/ssrn.3611619

Sofronis Clerides

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus
+357 2289 3709 (Phone)
+357 2289 5049 (Fax)

HOME PAGE: http://sofronis.clerides.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

Styliani-Iris Krokida

Cyprus University of Technology ( email )

30 Archbishop Street
Limassol, 3036
Cyprus

Neophytos Lambertides

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

Dimitris A. Tsouknidis (Contact Author)

University of Piraeus - Department of Maritime Studies ( email )

80, Karaoli and Dimitriou str.
Piraeus, Attiki 18534
Greece

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