Measuring household uncertainty in EU countries

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Title: Measuring household uncertainty in EU countries
ISBN: 978-952-323-291-4
Author: Ambrocio, Gene
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
ISSN: 1456-6184
Series year: 2019
Series number: 17/2019
Year of publication: 2019
Publication date: 7.9.2019
Pages: 23
Subject (yso): kotitaloudet; epävarmuus; odotukset; mittarit; EU-maat; euroalue
JEL: C32; D84; E37
Other keywords: uncertainty; household expectations; survey data
Abstract: I provide a measure of household uncertainty available for European Union (EU) countries. The measure draws from the same consumer survey data used to construct widely-used consumer sentiment indices. I find that increases in household uncertainty are followed by declines in consumer sentiment and household financial conditions. Using Euro Area-wide indices, I also find that the effects of increases in household uncertainty differ from increases in uncertainty from other sources such as financial markets and economic policy. Notably, household uncertainty shocks are inflationary. These results challenge the notion that (household) uncertainty shocks act like negative demand shocks.

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