Help, please, Which latent variable is likely to be associated with consumer sentiment (observable)?


#1

Dear All,
I am formulating a DSGE model using consumer sentiment data a one of observable variables, I am thinking about using which latent variable to be associated with consumer sentiment. I think about using either stock bubble growth (latent variable) or financial wealth growth (latent variable) to be associated with consumer sentiment growth rate. So which one do you think is better as a latent variable to be associated with consumer sentiment? financial wealth or stock bubble or other variables?
thank you and look forward to hearing from you.

Best regards,
Jesse


#2

That question is impossible to answer without knowing what exactly you are doing. What do you mean with

?
Is the question which model variable corresponds to consumer sentiment? And did you look at Barsky/Sims (2012) in the AER?