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Consumer Confidence Indices And Short-Term Forecasting Of Consumption

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  • ALI AL-EYD
  • RAY BARRELL
  • E. PHILIP DAVIS

Abstract

There is growing interest in examining the short-term link between survey-based confidence indicators and real economic activity. This paper builds on previous studies to establish whether there is a short-term predictive relationship between measures of consumer confidence and actual consumption, in a range of major industrial countries. It then extends such previous analyses by assessing whether this relation has changed over time, and whether we can attribute any time-varying relation to structural developments in the economy, such as financial deepening and the increasing role of house prices in determination of consumption. Copyright © 2009 National Institute of Economic and Social Research. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.

Suggested Citation

  • Ali Al-Eyd & Ray Barrell & E. Philip Davis, 2009. "Consumer Confidence Indices And Short-Term Forecasting Of Consumption," Manchester School, University of Manchester, vol. 77(1), pages 96-111, January.
  • Handle: RePEc:bla:manchs:v:77:y:2009:i:1:p:96-111
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    References listed on IDEAS

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    1. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
    2. W. Jos Jansen & Niek J. Nahuis, 2004. "Which survey indicators are useful for monitoring consumption? Evidence from European countries," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(2), pages 89-98.
    3. John Campbell & Angus Deaton, 1989. "Why is Consumption So Smooth?," Review of Economic Studies, Oxford University Press, vol. 56(3), pages 357-373.
    4. Jason Bram & Sydney Ludvigson, 1998. "Does consumer confidence forecast household expenditure? a sentiment index horse race," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 59-78.
    5. Nigel Pain & Martin Weale, 2001. "The Information Content of Consumer Surveys," National Institute Economic Review, National Institute of Economic and Social Research, vol. 178(1), pages 44-47, October.
    6. Ivan Roberts & John Simon, 2001. "What do Sentiment Surveys Measure?," RBA Research Discussion Papers rdp2001-09, Reserve Bank of Australia.
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    1. repec:spr:soinre:v:133:y:2017:i:2:d:10.1007_s11205-016-1376-4 is not listed on IDEAS
    2. Giancarlo Bruno, 2014. "Consumer confidence and consumption forecast: a non-parametric approach," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(1), pages 37-52, February.
    3. Emrah İ. Çevik & Turhan Korkmaz & Erdal Atukeren, 2012. "Business confidence and stock returns in the USA: a time-varying Markov regime-switching model," Applied Financial Economics, Taylor & Francis Journals, vol. 22(4), pages 299-312, February.
    4. Christian Gayer & Alessandro Girardi & Andreas Reuter, 2016. "Replacing Judgment by Statistics: Constructing Consumer Confidence Indicators on the basis of Data-driven Techniques. The Case of the Euro Area," Working Papers LuissLab 16125, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    5. Roman Horvath, 2012. "Do Confidence Indicators Help Predict Economic Activity? The Case of the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(5), pages 398-412, November.
    6. Olorunsola Emmanuel Olowofeso & Sani Ibrahim Doguwa, 2015. "Consumer confidence indices and short-term forecasting of consumption for Nigeria," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Indicators to support monetary and financial stability analysis: data sources and statistical methodologies, volume 39 Bank for International Settlements.
    7. Gagea Mariana, 2012. "Study of Industrial Conjuncture Balances in Romania, Using Logit Model with Heteroscedasticity," Scientific Annals of Economics and Business, De Gruyter Open, vol. 59(1), pages 337-349, July.
    8. Euler Pereira G. de Mello & Francisco Marcos R. Figueiredo, 2014. "Assessing the Short-term Forecasting Power of Confidence Indices," Working Papers Series 371, Central Bank of Brazil, Research Department.
    9. Christos Papamichael & Nicoletta Pashourtidou, 2016. "The Role of Survey Data in the Construction of Short-term GDP Growth Forecasts," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 10(2), pages 77-109, December.
    10. Dudek, Sławomir, 2008. "Consumer Survey Data and short-term forecasting of households consumption expenditures in Poland," MPRA Paper 19818, University Library of Munich, Germany.
    11. Stephen Bruestle & W. Mark Crain, 2015. "A mean-variance approach to forecasting with the consumer confidence index," Applied Economics, Taylor & Francis Journals, vol. 47(23), pages 2430-2444, May.

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