This paper assesses the information content of two survey indicators for consumption developments in the near future for eight European countries in the period 1985-1998. Empirical work on this topic typically focuses on consumer confidence, the perceptions of buyers of consumption goods. This paper examines whether perceptions of sellers of consumption goods, measured by retail trade surveys, may also improve short-term monitoring of consumption. We find that both consumer confidence and retailer confidence embody valuable information, when analyzed in isolation. For France, Italy and Spain we conclude that adding retail confidence does not improve the indicator model once consumer confidence has been included. For the UK the reverse case is obtained. For the remaining four countries we show that combining consumer sentiment and retail trade confidence into a composite indicator leads to optimal results. Our results suggest that incorporating information from retail trade surveys may offer significant benefits for the analysis of short-term prospects of consumption.
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Paper provided by EconWPA in its series Macroeconomics with number
0309013.
Length: 17 pages Date of creation: 17 Sep 2003 Date of revision: Handle: RePEc:wpa:wuwpma:0309013
Note: Type of Document - PDF; prepared on PC; to print on HP, A4 paper; pages: 17 ; figures: none. Final version Contact details of provider: Web page: http://129.3.20.41
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Find related papers by JEL classification: C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation
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