Consumer Confidence and Elections

63 Pages Posted: 9 Feb 2007  

Dimitrios D. Thomakos

University of Peloponnese - School of Management and Economics

Gikas A. Hardouvelis

University of Piraeus; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: February 10, 2007

Abstract

An event study analysis is performed on consumer confidence around election times using an effective sample of 84 national elections from 1985 through 2005 in the EU-15 countries. Consumer confidence is measured monthly using identical surveys, which began in 1985 and were gradually adopted by all EU-15 countries. Consumer confidence increases a number of months before the date of national elections and falls subsequently, a pattern that differs depending on whether the incumbent party wins or loses. Consumer confidence is able to predict positively the probability of re-election of the incumbent party and has extra predictive power over and above several macroeconomic variables that are used in the political business cycle literature. A similar behavior characterizes consumer confidence in the United States.

Keywords: consumer confidence, national elections, incumbent party, elections fatigue, macro-economy, fiscal conditions, political business cycle, EU-15, USA

JEL Classification: D10, D72, E61, E62, 051, 052

Suggested Citation

Thomakos, Dimitrios D. and Hardouvelis, Gikas A., Consumer Confidence and Elections (February 10, 2007). Available at SSRN: https://ssrn.com/abstract=962427 or http://dx.doi.org/10.2139/ssrn.962427

Dimitrios D. Thomakos (Contact Author)

University of Peloponnese - School of Management and Economics ( email )

Department of Economics
22100 Tripolis
Greece
+30 2710 230139 (Fax)

HOME PAGE: http://econ.uop.gr/~thomakos

Gikas A. Hardouvelis

University of Piraeus ( email )

80 Karaoli & Dimitriou Str.
18534 Piraeus, 185 34 -GR
Greece
+32010 4142323 (Phone)
+3210 6724848 (Fax)

HOME PAGE: http://www.eurobank.gr

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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