Relationship between the Stock Market Index and Consumer Confidence after the 2007-2008 Financial CrisisHanitra Rakotondramaro*
IAE-University of Perpignan, via Domitia, France
- *Corresponding Author:
- Dr. Hanitra Rakotondramaro
IAE-University of Perpignan Via Domitia, France
E-mail: [email protected]
Received Date: October 25, 2016; Accepted Date: November 11, 2016; Published Date: November 14, 2016
Citation: Rakotondramaro H (2016) Relationship between the Stock Market Index and Consumer Confidence after the 2007-2008 Financial Crisis. Int J Econ Manag Sci 5:380. doi: 10.4172/2162-6359.1000380
Copyright: © 2016 Rakotondramaro H. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
The paper investigates potential Granger causality between the stock market index (SMI) and the consumer confidence (sentiment) index (CSI) for the period between 2007 and 2013. While studying SMI-CSI relations, the model is calibrated for US data (S&P500 and the Michigan Survey Research Centre measures of consumer confidence) and shows causality is from the stock market index to consumer confidence. This result is a consequence of the stock market index towards the consumers’ attitudes, as they consider the index to be the leading indicator of the future situation, regardless of whether they own stocks or not. They also maintain a degree of optimism regarding the future economic situation.