TY  - JOUR
AU  - Barsky,Robert B.
AU  - Sims,Eric R.
TI  - Information, Animal Spirits, and the Meaning of Innovations in Consumer Confidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15049
PY  - 2009
Y2  - June 2009
UR  - http://www.nber.org/papers/w15049
L1  - http://www.nber.org/papers/w15049.pdf
N1  - Author contact info:
Robert B. Barsky
Department of Economics
University of Michigan
Ann Arbor, MI  48109-1220
Tel: 734/764-9476
Fax: 734/764-2769
E-Mail: barsky@umich.edu

Eric R. Sims
Department of Economics
University of Notre Dame
723 Flanner Hall
South Bend, IN 46556
Tel: 574/631-6309
Fax: 574/631-4783
E-Mail: esims1@nd.edu
AB  - Innovations to measures of consumer confidence convey incremental information about economic activity far into the future. Comparing the shapes of impulse responses to confidence innovations in the data with the predictions of a calibrated New Keynesian model, we find little evidence of a strong causal channel from autonomous movements in sentiment to economic outcomes (the "animal spirits" interpretation). Rather, these impulse responses support an alternative hypothesis that the surprise movements in confidence reflect information about future economic prospects (the "information" view). Confidence innovations are best characterized as noisy measures of changes in expected productivity growth over a relatively long horizon.
ER  -