Consumer sentiment and government confidence: Is there a stable causal relationship?

Consumer confidence and perceived political confidence are known to playindependently a crucial role in the economic growth of a country. Using French monthlyeconomic and political data, we analyse the relationships between the president, the primeminister and consumer confidence during cohabitation and non-cohabitation periods,based on a SUR (seemingly unrelated regression) model. During cohabitation periods,whenever the president’s confidence index increased the prime minister index decreased.Further, confidence in the prime minister was useful for predicting consumer confidence.During non-cohabitation periods, consumer confidence helps to forecast both the president’sconfidence and the prime minister’s confidence.