Does sentiment explain consumption?

W. D A Bryant, Joseph Macri

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)


This paper examines whether "consumer sentiment," an often neglected variable, explains consumption expenditures for Australia. Since household consumption accounts for more than 60 percent of U.S. GDP and a similar proportion in other developed economies, fluctuations in consumption may result in significant changes in the state of the economy. Therefore, we develop a theoretical model that suggests why consumer sentiment may influence consumption expenditures. Furthermore, using a carefully specified consumption function as the "test-bed," we consider empirically whether there is an independent impact of sentiment on consumption. Our results suggest that consumer sentiment does influence variations in consumption expenditure.

Original languageEnglish
Pages (from-to)97-110
Number of pages14
JournalJournal of Economics and Finance
Issue number1
Publication statusPublished - Mar 2005

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