One of the most important aspects of consumer surveys is the computation of the consumer confidence index, which aims to provide accurate figures on the financial position and outlook of households as well as their intention concerning future consumption and savings. . Although the motion of the consumer confidence index is of interest to both policymakers and economic forecasters, it is not obvious whether the sub-questions included in the surveys and the published composite index derived from such questions can measure exactly what survey makers are curious to know. In this study we examine the properties and forecasting capability of the Hungarian consumer confidence index published by GKI Economic Research Plc. We argue that some questions are unable to measure what they theoretically should. However, others are useful in forecasting the consumption expenditure of Hungarian households. Our results suggest that, in addition to macro variables, the consumer confidence index contains information over and above macro variables.
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Paper provided by EconWPA in its series Microeconomics with number
0512006.
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