Does the stock market affect private consumption?

Forskningsenhed: EPRU


Abstract:
Slumps in the real economy are often preceded by large and sudden declines on the stock market and economic recoveries are typically accompanied by stock market booms. This project aims to explore whether there is a causal link from the performance of the stock market to the cycles in the real economy working through household consumption: if stock owners cut spending when they suffer losses and raise it when they make gains, then swings on the stock market amplify the cycles of the real economy through their effect on aggregate demand.

Read the full project description here