The Role of Economic and Political Factors in Shaping Consumers' Confidence in Pakistan
DOI:
https://doi.org/10.54183/jssr.v3i2.237Keywords:
Consumer Confidence, uncertainty, Economic factors, Political factors, Elections, Terror attacksAbstract
Consumer confidence is an important determinant of economic growth. However, consumer confidence itself is determined by the economic and political situation of the country. This paper contributes to the literature by examining the role of economic and political factors in developing consumer confidence in Pakistan over the period from February 2012 to December 2020. Economic factors include GDP growth, inflation, interest rate, stock returns and exchange rate while elections, terror attacks and news are taken as political factors affecting Consumer confidence. Regression analysis is performed and models are estimated using the OLS. The results show that economic variables such as inflation and economic growth are statistically significant determinants of consumer confidence in Pakistan. However, when political variables are added to the model, the explanatory power of the model significantly increases. Political variables such as elections and terror attacks have a statistically significant impact on the confidence of Pakistani consumers. The findings of this paper imply that consumer confidence is an important determinant of economic well-being and business cycle fluctuations of a country itself determined by economic and political factors where political factors play a dominant role in Pakistan.
References
Acuña, G., Echeverría, C., Pinto-gutiérrez, C., & Acuña, G. (2019). International Review of Applied Economics Consumer confidence and consumption : empirical evidence from Chile from Chile. International Review of Applied Economics, 00(00), 1–19. https://doi.org/10.1080/02692171.2019.1645816
Al-Eyd, A., Barrell, R., & Davis, E. P. (2009). Consumer confidence indices and short-term forecasting of consumption. Manchester School, 77(1), 96–111. https://doi.org/10.1111/j.1467-9957.2008.02089.x
Baker, S. R., Davis, S. J., Dashkeyev, V., Deriy, O., Dinh, E., Ezure, Y., … Takeda, N. (2016). Measuring Economic Policy Uncertainity. The Quarterly Journal of Economics, 131(4), 1593–1636. https://doi.org/10.1093/qje/qjw024.Advance
Carlos Bozzoli Cathérine Mülle. (2009). Perceptions and Attitudes to a Terrorist Shock : Evidence from the UK Economics of Security Working Paper Seriesr Perceptions and Attitudes to a Terrorist Shock : Evidence from the UK.
Çelik, S., Aslanoglu, E., & Uzun, S. (2010). Determinants of Consumer Confidence in Emerging Economies: A Panel Cointegration Analysis. Topics in Middle Eastern andNorth African Economies, 12. https://www.luc.edu/orgs/meea/volume12/PDFS/Celik_DeterminantsofConsumerConfidenceEmergingMarkets.pdf
Cohen, J., Tsfati, Y., & Sheafer, T. (2008). The influence of presumed media influence in politics: Do politicians’ perceptions of media power matter? Public Opinion Quarterly, 72(2), 331–344. https://doi.org/10.1093/poq/nfn014
Curtin, R. (2007). Consumer Sentiment Surveys: Worldwide Review and Assessment. Journal of Business Cycle Measurement and Analysis, 2007(1), 7–42. https://doi.org/10.1787/jbcma-v2007-art2-en
Damstra, A., & Boukes, M. (2018a). The Economy , the News , and the Public : A Longitudinal Study of the Impact of Economic News on Economic Evaluations and Expectations. https://doi.org/10.1177/0093650217750971
Damstra, A., & Boukes, M. (2018b). The economy . How do the media cover it and what are the effects ? A literature review. (January), 1–14. https://doi.org/10.1111/soc4.12579
De Boef, S., & Kellstedt, P. M. (2004). The political (and economic) origins of consumer confidence. American Journal of Political Science, 48(4), 633–649. https://doi.org/10.1111/j.0092-5853.2004.00092.x
Denis Wu, H., Stevenson, R. L., Chen, H. C., & Nuray Güner, Z. (2002). The conditioned impact of recession news: A time-series analysis of economic communication in the United States, 1987-1996. International Journal of Public Opinion Research, 14(1), 19–36. https://doi.org/10.1093/ijpor/14.1.19
Drakos, K., & Kallandranis, C. (2015). Defence and Peace Economics A Note on the Effect of Terrorism on Economic Sentiment. 2694(September). https://doi.org/10.1080/10242694.2015.1016295
Drakos, K., & Muller, C. (2010). Terrorism Risk Concern in Europe Konstantinos Drakos and Cathérine Müller Terrorism Risk Concern in Europe (No. 37). Berlin.
Enders, W. (2002). What do we know about Substitution Effect in Transnational Terrorism? University of Southern California.
Erikson, R. ., Mackuen, M. ., & Stimson, J. . (2002). The Macro Polity. In Cambridge University Press.
Fogarty, B. J. (2005). Determining economic news coverage. International Journal of Public Opinion Research, 17(2), 149–172. https://doi.org/10.1093/ijpor/edh051
Füss, R., & Bechtel, M. M. (2008). Partisan politics and stock market performance: The effect of expected government partisanship on stock returns in the 2002 German federal election. Public Choice, 135(3–4), 131–150. https://doi.org/10.1007/s11127-007-9250-1
Goidel, R. K., & Langley, R. E. (1995). Media coverage of the economy and aggregate economic evaluations: Uncovering evidence of indirect media effects. Political Research Quarterly, 48(2), 313-328. https://doi.org/10.1177/106591299504800205
Golinelli, R., & Giuseppe, P. (2003). What is this Thing called Confidence? A Comparative Analysis of Consumer Confidence Indexes in Australia, Europe and the USA. Retrieved from https://www.researchgate.net/publication/265567950
Hall, P. A. (1993). Policy paradigms, social learning, and the state: The case of economic Policymaking in Britain. Comparative Politics, 25(3), 275. https://doi.org/10.2307/422246
Haller, H. B. (1997). Reality Bites News Exposure and Economic Opinion (Vol. 61).
Hart, R. P., & Daughton, S. (2021). Analyzing Media. In Modern Rhetorical Criticism. https://doi.org/10.4324/9781315663555-13
Hollanders, D., & Vliegenthart, R. (2011). The influence of negative newspaper coverage on consumer confidence : The Dutch case. Journal of Economic Psychology, 32(3), 367–373. https://doi.org/10.1016/j.joep.2011.01.003
Jansen, W. J., & Nahuis, N. J. (2003). The stock market and consumer confidence: European evidence. Economics Letters, 79(1), 89–98. https://doi.org/10.1016/S0165-1765(02)00292-6
Ju, Y. (2008). The asymmetry in economic news coverage and its impact on public perception in South Korea. International Journal of Public Opinion Research, 20(2), 237–249. https://doi.org/10.1093/ijpor/edn021
Kennedy-Pipe, C., Clubb, G., Mabon, S., & Waxman, D. (2019). Living with Terror, Not Living in Terror: The Impact of Chronic Terrorism on Israeli Society. Terrorism and Political Violence, 5(5), 181–196. https://doi.org/10.4135/9781473917248.n14
Klomp, J., & Haan, J. De. (2013). Political budget cycles and election outcomes. Public Choice, 157(2013), 245–267. https://doi.org/10.1007/s11127-012-9943-y
krippendorff, K. (2004). Measuring the Reliability of Qualitative Text Analysis Data. Quality & Quantity, 38(6), 787–800. https://doi.org/10.1007/s11135-004-8107-7
Lopez, H. B., & Durr, A. (2003). The determinants of consumer confidence : the case of United States and Belgium. (July), 1–37.
Ludvigson, S. C. (2004). Spending. 18(2), 29–50.
Marc, B., & Reuter, A. (2018). in Europe (Vol. 8022). https://doi.org/10.2765/088000
McCombs E., M., & Shaw L., D. (1993). The evolution of agenda-setting research: Twenty-five years in the marketplace of ideas. Journal of Communication, 43(2), 58–67. http://search.ebscohost.com/login.aspx?direct=true&db=ufh&AN=9306235359&site=ehost-live
Mckercher, B., & Hui, E. L. L. (2004). Terrorism , Economic Uncertainty and Outbound Travel from Hong Kong. Journal of Travel & Tourism Marketing, 15(2–3), 37–41. https://doi.org/10.1300/J073v15n02
Nikkinen, J. (2010). Terrorism and Stock Market Sentiment. 45, 263–275.
Qianqian, L., & Yijun, L. (2020). The China-Pakistan economic corridor: The Pakistani media attitudes perspective. Technology in Society, 101303. https://doi.org/10.1016/j.techsoc.2020.101303
Ramalho, E. A., Caleiro, A., & Dionfsio, A. (2011). Explaining consumer confidence in Portugal. Journal of Economic Psychology, 32(1), 25–32. https://doi.org/10.1016/j.joep.2010.10.004
Roos, M. W. M. (2008). Willingness to consume and ability to consume. Journal of Economic Behavior and Organization, 66(2), 387–402. https://doi.org/10.1016/j.jebo.2006.03.008
Sami, F. & Khattak, M. K. (2017). The Impact of Terrorism on the Economic Growth: An Empirical Study of Pakistan. The Journal of Humanities and Social Sciences, 25(2), 31–46. http://ojs.uop.edu.pk/jhss/article/view/664
Schneider, M., Angeletos, G., Bianchi, F., Hansen, L., Jaimovich, N., Justiniano, A., … Routledge, B. (2012). Ambigious Business Cycles (No. 17900). Massachusetts.
Sergii, D. (2015). Consumer onfidence and Household Deposits (ACM; Vol. 151). https://doi.org/10.1145/3132847.3132886
Shrestha, M. B., & Bhatta, G. R. (2018). Selecting appropriate methodological framework for time series data analysis. Journal of Finance and Data Science, 4(2), 71–89. https://doi.org/10.1016/j.jfds.2017.11.001
Soroka, S., & McAdams, S. (2015). News , Politics , and Negativity. Political Communication, 32, 1–22. https://doi.org/10.1080/10584609.2014.881942
Soroka, S. N., Stecula, D. A., & Wlezien, C. (2015). It’s (Change in) the (Future) Economy, Stupid: Economic Indicators, the Media, and Public Opinion. American Journal of Political Science, 59(2), 457–474. https://doi.org/10.1111/ajps.12145
Uhl, M. W. (2011). Explaining U.S. consumer behavior with news sentiment. ACM Transactions on Management Information Systems, 2(12), 1–18. https://doi.org/10.1145/1985347.1985350
Usher, N. (2012). Ignored, uninterested, and the blame game: How The New York Times, Marketplace, and TheStreet distanced themselves from preventing the 2007–2009 financial crisis. Journalism, 14(2), 190-207. https://doi.org/10.1177/1464884912455904
van Aarle, B., & Kappler, M. (2012). Economic sentiment shocks and fluctuations in economic activity in the Euro area and the USA. Intereconomics, 47(1), 44–51. https://doi.org/10.1007/s10272-012-0405-z
Vuchelen, J. (1995). Political events and consumer confidence in Belgium. Journal of Economic Psychology, 16(4), 563–579. https://doi.org/10.1016/0167-4870(95)00028-6
Westerhoff, F. H. (2005). Consumer behavior and fluctuations in economic activity. Advances in Complex Systems, 8(2–3), 209–215. https://doi.org/10.1142/S0219525905000452
Wilcox, J. A. (2007). Forecasting components of consumption with components of consumer sentiment. Business Economics, 42(4), 22–32. https://doi.org/10.2145/20070403
Zagórski, K., & McDonnell, J. S. (1995). “Consumer Confidence” Indexes as social indicators. Social Indicators Research, 36(3), 227–246. https://doi.org/10.1007/BF01078815
Zaller, J. (2003). A new standard of news quality: Burglar alarms for the monitorial citizen. Political Communication, 20(2), 109–130. https://doi.org/10.1080/10584600390211136
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Copyright in the Journal of Social Sciences Review is retained by the author(s). Authors also grant any third party the right to use the article freely as long as its integrity is maintained and its original authors, citation details and publisher are identified.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
SSR's Editorial Board shares the vision of providing free access to information, education, and science for everyone, thus promoting its content through an OPEN ACCESS POLICY, fulfilling the DOAJ definition of open access. The JSSR adheres to an Open Access and Copyright Licensing Policy based on the belief that making research freely accessible to the public promotes greater global knowledge sharing.
The JSSR uses the Creative Commons Attribution-NonCommercial 4.0 International License. The authors who apply and publish in JSSR consent to abide by the copyright policy set out in the Creative Commons 4.0 license (Attribution-NonCommercial 4.0 International license).
- Copyright in the Journal of Social Sciences Review is retained by the author(s).
- Authors also grant any third party the right to use the article freely as long as its integrity is maintained and its original authors, citation details and publisher are identified.
While "By 'open access' to this literature, we mean its free availability on the public internet, permitting any users to read, download, copy, distribute, print, search, or link to the full texts of these articles, crawl them for indexing, pass them as data to software, or use them for any other lawful purpose, without financial, legal, or technical barriers other than those inseparable from gaining access to the internet itself."
