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Can consumer confidence data predict real variables? Evidence from Croatia

  • Marija Kuzmanovic


  • Peter Sanfey



This paper uses monthly data to examine the links between consumer confidence and real economic variables in Croatia, and it tests whether movements in the former contain predictive power for the latter. The results suggest that changes in consumer confidence help to explain retail turnover and imports, while expectations about forthcoming major purchases have particularly strong predictive power for retail turnover. We also find that the inclusion of confidence on the right-hand side improves the fit of simple models of retail turnover, a variable that is highly correlated with quarterly GDP. The results therefore highlight the usefulness of these survey data in helping to explain and forecast the real economy.

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Paper provided by European Bank for Reconstruction and Development, Office of the Chief Economist in its series Working Papers with number 151.

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Length: 14 pages
Date of creation: Oct 2012
Date of revision:
Publication status: Published in Working papers 151, European Bank for Reconstruction and Development
Handle: RePEc:ebd:wpaper:151
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  1. Dées, Stéphane & Soares Brinca, Pedro, 2011. "Consumer confidence as a predictor of consumption spending: evidence for the United States and the euro area," Working Paper Series 1349, European Central Bank.
  2. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
  3. Katalin Bodnár, 2010. "Household consumption expenditures and the consumer confidence index," MNB Bulletin, Magyar Nemzeti Bank (the central bank of Hungary), vol. 5(1), pages 6-19, March.
  4. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
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