Measures of Investor and Consumer Confidence and Policy Actions in the Current Crisis

28 Pages Posted: 20 Apr 2016

See all articles by Mansoor Dailami

Mansoor Dailami

World Bank

Paul R. Masson

affiliation not provided to SSRN

Date Written: July 1, 2009

Abstract

The current financial crisis has highlighted the danger that declines in confidence can have a self-fulfilling effect on economic activity. In this paper, the authors consider ways of measuring investor and consumer confidence, and try to explain the evolution of confidence using measures of financial volatility, investment performance, macroeconomic outcomes, and policy actions. They identify a link between investor and consumer confidence. Finally, they show that liquidity provision and easing of interest rates had only a limited effect on financial market spreads during the crisis, arguing for additional measures to address the loss of confidence. The paper focuses on the need for financial regulatory reform, and shows how the incentives to cooperate in this area are stimulated by a common shock to confidence.

Keywords: Debt Markets, Emerging Markets, Currencies and Exchange Rates, Banks & Banking Reform

Suggested Citation

Dailami, Mansoor and Masson, Paul R., Measures of Investor and Consumer Confidence and Policy Actions in the Current Crisis (July 1, 2009). World Bank Policy Research Working Paper No. 5007, Available at SSRN: https://ssrn.com/abstract=1437959

Mansoor Dailami (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/mdailami

Paul R. Masson

affiliation not provided to SSRN

No Address Available

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