Sentiments and Economic Activity: Evidence from U.S. States / Jess Benhabib, Mark M. Spiegel.

Format:

Book

Author/Creator:

Benhabib, Jess.

Contributor:

National Bureau of Economic Research.

Spiegel, Mark M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23899.

NBER working paper series no. w23899

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Sentiments and Economic Activity

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

We examine whether sentiment influences aggregate demand by studying the relationship between the Michigan Survey expectations concerning national output growth and future economic activity at the state level. We instrument for local sentiments with political outcomes, positing that agents in states with a higher share of congressmen from the political party of the sitting President will be more optimistic. This instrument is strong in the first stage, and our results confirm a positive relationship between sentiments and future state economic activity that is robust to a battery of sensitivity tests.

Notes:

Print version record

October 2017.