Can Consumer Confidence Forecast Household Spending? Evidence from the European COmmission Business and Consumer Surveys
AbstractThis paper represents a first formal attempt to examine the ability of consumer confidence to forecast household spending within a multicountry framework. To this end, we use two confidence indices, namely the Consumer Confidence Indicator and the Economic Sentiment Indicator, both of which are derived from the European Commission Business and Consumer Survey. As in previous single-country investigations, we find that there is much variability in the in-sample incremental forecasting performance of the confidence indices for the countries canvassed. Further, the results of our out-of-sample tests indicate that the confidence indices considered provide limited information about the future path of household spending.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 72 (2006)
Issue (Month): 3 (January)
Other versions of this item:
- John A. Cotsomitis & Andy C. C. Kwan, 2004. "Can Consumer Confidence Forecast Household Spending? Evidence from the European Commission Business and Consumer Surveys," Departmental Working Papers, Chinese University of Hong Kong, Department of Economics _161, Chinese University of Hong Kong, Department of Economics.
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
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- Javier Jareño, 2007. "Opinion-based surveys in the conjunctural analysis of the Spanish economy," Banco de Espaï¿½a Occasional Papers 0706, Banco de Espa�a.
- Österholm, Pär, 2009.
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- Pär Österholm, 2010. "Improving Unemployment Rate Forecasts Using Survey Data," Finnish Economic Papers, Finnish Economic Association, Finnish Economic Association, vol. 23(1), pages 16-26, Spring.
- Luca Zanin, 2010. "The relationship between changes in the Economic Sentiment Indicator and real GDP growth: a time-varying coefficient approach," Economics Bulletin, AccessEcon, vol. 30(1), pages 837-846.
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