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Consumers Sentiment and Cognitive Macroeconometrics Paradoxes and Explanations

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Author Info
Maurizio Bovi (ISAE)

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Abstract

Using data from the Business Surveys Unit of the European Commission, this paper examines how, and how accurately, people assess economic systems. As expected, respondents demonstrate to know their own situation better than the system wide one, and the past better than the future. Also, correctly, perceptions accumulate towards the long run “stationarity” of the economic stance. In contrast, the presence of a long-run bias in the “forecast” error is detected. Evidence shows that it is due to people’s tendency to judge over-pessimistically and/or to forecast over-optimistically. Finally, individuals seem to believe that their own situation may consistently drift apart from the general one. I interpret commonsense behaviors as supporting the reliability of survey data. Puzzling results are assessed in the light of cognitive economics.

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Paper provided by EconWPA in its series Macroeconomics with number 0512002.

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Date of creation: 05 Dec 2005
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Handle: RePEc:wpa:wuwpma:0512002

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Related research
Keywords: Beliefs; survey research; consumer sentiment; cognitive economics;

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Find related papers by JEL classification:
C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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    Other versions:
  3. Maurizio Bovi, 2004. "Consumer Surveys and Reality," Macroeconomics 0408012, EconWPA. [Downloadable!]
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    Other versions:
  5. James Mitchell & Martin Weale, 2005. "Quantitative inference from qualitative business survey panel data: a microeconometric approach," NIESR Discussion Papers 261, National Institute of Economic and Social Research. [Downloadable!]
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