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Personal Finances vs. the Overall Economic Conditions: What Drives the New EU Member States’ Stock Markets?

Author

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  • Lolić Ivana

    (Teaching and Research Assistant, University of Zagreb, Faculty of Economics and Business Zagreb, Croatia)

  • Sorić Petar

    (Ph.D. Assistant Professor, University of Zagreb, Faculty of Economics and Business Zagreb, Croatia)

  • Čižmešija Mirjana

    (Ph.D. Professor, University of Zagreb, Faculty of Economics and Business Zagreb, Croatia)

Abstract

This paper analyses the leading characteristics of the Consumer Confidence Index (CCI) with respect to stock market returns for 11 New EU Member States. It proposes novel CCI weights by minimizing mean squared errors from regression forecasting equations, using CCI lags as regressors. With regards to the obtained “optimal” weights, the examined countries are grouped into micro‑ and macro‑oriented clusters. A strong shift is found in the weights due to the recent recession. The micro aspects (reflecting the wealth effect) severely lose their importance in the crisis, while the consumers’ macroeconomic sentiments grow in significance and constitute a separate transmission channel.

Suggested Citation

  • Lolić Ivana & Sorić Petar & Čižmešija Mirjana, 2017. "Personal Finances vs. the Overall Economic Conditions: What Drives the New EU Member States’ Stock Markets?," Comparative Economic Research, Sciendo, vol. 20(4), pages 125-142, December.
    • Handle: RePEc:vrs:coecre:v:20:y:2017:i:4:p:125-142:n:7
    DOI: 10.1515/cer-2017-0031
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    Cited by:

    1. Roger Fernandez-Urbano & Nevena Kulic, 2020. "Requiem for a Dream: Perceived Economic Conditions and Subjective Well-Being in Times of Prosperity and Economic Crisis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 151(3), pages 793-813, October.

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