Article 1: Public reaction to stock market volatility
The article by Payne, Browning, and Kalenkoski (2016) examines sentiments brought out by the Granger causality analysis that influenced the general public due to changes in the share markets. The primary research question of the article is, “How does the public react to changes in the stock market?”. It investigates whether the movement of markets precedes changes in public sentiment, specifically during high volatile and low hungry periods. This investigation is also crucial because it focuses on the relationship between financial markets and individuals’ emotions, thus revealing how these emotions are reflected in market dynamics. Aiming to develop literature, the study questions rational and stable risk preferences suggested by Modern Portfolio Theory. The ATUS data are used here for the years 2010 and 2012, based on survey waves. According to Payne, Browning, and Kalenkoski (2016), statistical analysis indicates that the public responds to market events with an unavoidable delay by reacting more strongly during economic crises and high volatility. The results highlight the need for approaches that minimize the negative impacts of market fluctuation on decision-making and emotional wellness.
Article 2: Does Wall Street Affect Main Street?
In an effort to address the research question: Does Wall Street affect Main Street? ZarBabal and Evans’s (2017) article delves into the nexus between investor sentiment and consumer spending on non-durable goods. Scientifically and socially, this study is critical because it tries to determine whether equity market biases affect consumer behavior, providing insights into the spillover effect of investor sentiment in economics at large. Extending literature that relies on aggregate stock wealth, the study shows how consumer spending depends on perceived changes in future stock wealth. The data set contains a sentiment index by Baker and Wurgler and other economic indicators. As for the empirical model, regression analysis is used, and the results show a contemporary relationship between investor sentiment and non-durable consumption (ZarBabal and Evans (2017). The study concludes that investor sentiment(s) also acts as an error-correction variable and implies that policymakers, including the Federal Reserve, should consider investment sentiments in their thinking of marginal consumption propensities by households.
Comparative Analysis
Both Payne, Browning & Kalenkoski (2016) and ZarBabal & Evans ( 2017 ) articles are related because they study the relationship between financial markets and public behavior through different perspectives. Payne, Browning, and Kalenkoski (2016) evaluate social sentiments provoked by stock changes and use Granger causality analysis to analyze market movements and the public response. Contrastingly, ZarBabal and Evans (2017) discuss the relationship between investor sentiment and consumer spending by exploring how biasness in equity markets affects Main Street. Both investigations show that emotions and sentiment contribute to financial decision-making and broader macroeconomics.
Within the framework of my research on “Stock Market Dynamics and Their Influence over Consumer Behavior,” these articles offer important insights regarding the complex relationship between stock market dynamics, investor attitudes, and public responses. The public opinions on aftermarket changes can be understood by exploring the research of Payne, Browning, and Kalenkoski (2016) on how stock dynamics sentiments may influence consumer sentimental patterns. This theme of sentiment spillover from the stock market to other markets is also discussed by ZarBabal and Evans (2017) about consumer behavior. The two articles provide a base for probing into the complex lines of connection between stock market trends and patterns in consumption I intend to study.
Bibliography
Payne, Patrick, Christopher Browning, and Charlene M. Kalenkoski. “Public reaction to stock market volatility: evidence from the ATUS.” Applied Economics Letters 23, no. 17 (2016): 1197-1200.
ZarBabal, KhasadYahu, and Jocelyn Evans. “Does wall street affect main street? examining potential spillovers from investor stock market sentiment to personal consumption expenditures.” Journal of Economics and Finance 42 (2018): 293-314.
write