The Relationship between consumer confidence and the stock market in the European Union

This thesis uses the consumer confidence index (CCI) and the headline stock indices of 11 European countries to study the relationship between the CCI and the stock market. The co-movement between the CCI and the stock market are examined by using a VAR model, testing for Granger causality and estimating the dependence structure by using copula models. I find that, the stock market has a significant influence on the consumer confidence. Although there is a slight change in correlation through time and in different stages of the economy, this influence does not significantly change.