Description
Since 1976, the U.S. Government has experienced nineteen government shutdowns ranging in length from one to thirty-five days. Prior research has demonstrated the negative effects of government shutdowns on the macro economy but makes no mention of how consumers perceive these effects. Using a multiple regression analysis of data from the Index of Consumer Sentiment and the Federal Reserve, this paper will examine the empirical relationship between measures of consumer sentiment and government shutdowns in the United States. I anticipate that the occurrence of a government shutdown in a particular month will be associated with a decrease in consumer sentiment for the same period, and that the length of the government shutdown will amplify that decrease.
The Effect of Government Shutdowns on Consumer Sentiment
Since 1976, the U.S. Government has experienced nineteen government shutdowns ranging in length from one to thirty-five days. Prior research has demonstrated the negative effects of government shutdowns on the macro economy but makes no mention of how consumers perceive these effects. Using a multiple regression analysis of data from the Index of Consumer Sentiment and the Federal Reserve, this paper will examine the empirical relationship between measures of consumer sentiment and government shutdowns in the United States. I anticipate that the occurrence of a government shutdown in a particular month will be associated with a decrease in consumer sentiment for the same period, and that the length of the government shutdown will amplify that decrease.