Journal of Business & Economic Policy

Consumer Confidence under Economic Crises: Empirical Analysis across Regions and Countries
Chen-Jui Huang

Abstract
This paper differentiates the impact of five economic crises on consumer confidence with OECD monthly data. There exhibits an amplified confidence response to contemporaneous changes in industrial production in advanced country groups but the link is lagged by six months in China. The role for the inflation and long-term interest rate is overall absent, indicating limits for monetary policy. S&P 500 returns increase confidence, whereas the VIX shows minimal effects. Two distinct relations for the nominal effective exchange rate are observed through changes in purchasing power in advanced economies and trade-related dynamics in China. The EMS Crisis dampens confidence in most subsamples but strengthens the Chinese counterpart. The Asian Crisis intensifies the downward shift in Japanese and Chinese confidence, while the Dotcom Bubble Burst enhances confidence in most subsamples. Consumer confidence fluctuates in both directions in 2008-2009 except for China. A higher volatility but a lower mean in Covid-19 confidence movements suggest a steady improvement in household resilience over the past decade.

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