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A Comparison of Economic Expectations In Germany and Turkey: An Analysis of ZEW and Economic Trust Index Sentiment Indicators

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  • Hakan Eryüzlü
  • Sertaç Hopoğlu

Abstract

The “economic sentiment” indices, which reflect the short-term outlook of an economy, have been used in some developed countries for many years. The ZEW index created by the European Economic Research Center in Germany (Zentrum für Europäische Wirtschaftsforschung-ZEW) is one of these indices and is used as an indicator of the short-term prospects of the German economy. Economic Confidence Index (EGE) is a similar tool applied by the Turkish Statistical Institute (TÜİK) in Turkey with the same purpose. This study aims to investigate whether economic expectations in Germany, Turkey’s most important foreign trade partner, affect expectations in Turkey. For this purpose, causality test developed by Hacker and Hatemi-J (2006) and causality test developed by Hatemi-J (2012) were applied to monthly ZEW and EGE index data for 2007: 01-2019: 05 period. The results suggest that in case of worsening of expectations for the German economy expectations about the Turkish economy also worsen; however, positive expectations about the German economy always do not always lead to optimism in the Turkish economy.

Suggested Citation

  • Hakan Eryüzlü & Sertaç Hopoğlu, 2020. "A Comparison of Economic Expectations In Germany and Turkey: An Analysis of ZEW and Economic Trust Index Sentiment Indicators," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 8(1), pages 131-142, June.
    • Handle: RePEc:anm:alpnmr:v:8:y:2020:i:1:p:131-142
    DOI: https://doi.org/10.17093/alphanumeric.590209
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    More about this item

    Keywords

    Economic Confidence Index; Economic Expectations; Trade; ZEW Confidence Index;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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