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The Causality Relationships between Economic Confidence and Fundamental Macroeconomic Indicators: Empirical Evidence from Selected European Union Countries

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  • Selim Koray Demirel

    (Department of Economics, Faculty of Economics and Administrative Sciences, Karadeniz Technical University, 61080 Trabzon, Turkey)

  • Seyfettin Artan

    (Department of Economics, Faculty of Economics and Administrative Sciences, Karadeniz Technical University, 61080 Trabzon, Turkey.)

Abstract

Economic confidence is an important tool in predicting macroeconomic changes. In this study, causality relationships between the confidence level and the fundamental macroeconomic indicators are analyzed using panel data analysis for 13 European Union countries for the period 2000: 1-2014: 12. According to the obtained results, a bidirectional causality relationship between the level of confidence and consumption expenditures, industrial production and inflation; a unidirectional relationship from the level of confidence to the unemployment rate; and a unidirectional relationship from interest rates to the level of confidence were detected. These results are compatible with the view that economic confidence is a leading indicator in explaining the changes in macroeconomic indicators.

Suggested Citation

  • Selim Koray Demirel & Seyfettin Artan, 2017. "The Causality Relationships between Economic Confidence and Fundamental Macroeconomic Indicators: Empirical Evidence from Selected European Union Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 417-424.
    • Handle: RePEc:eco:journ1:2017-05-50
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    1. Inna Bielova & Jaroslav Halík & Lyudmila Ryabushka, 2021. "The Causal Nexus of Consumer and Business Confidence Indexes in Early Pandemic Period: Evidence from OECD Countries," JRFM, MDPI, vol. 14(7), pages 1-14, July.
    2. Lenka Mynaříková & Vít Pošta, 2023. "The Effect of Consumer Confidence and Subjective Well-being on Consumers’ Spending Behavior," Journal of Happiness Studies, Springer, vol. 24(2), pages 429-453, February.
    3. Mariana Hatmanu & Cristina Cautisanu & Mihaela Ifrim, 2020. "The Impact of Interest Rate, Exchange Rate and European Business Climate on Economic Growth in Romania: An ARDL Approach with Structural Breaks," Sustainability, MDPI, vol. 12(7), pages 1-23, April.
    4. António Bento Caleiro, 2021. "Learning to Classify the Consumer Confidence Indicator (in Portugal)," Economies, MDPI, vol. 9(3), pages 1-12, September.

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    More about this item

    Keywords

    Economic Confidence; Panel Causality Analysis; European Union; Macroeconomic Variables JEL Classifications : C33; E20; O52 /> // Provide a local fallback if the CDN cannot be reached if (typeof google == 'undefined') { document.write(unescape(%3Cscript src='https://www.econjournals.com/lib/pkp/js/lib/jquery/jquery.min.js' type='text/javascript'%3E%3C/script%3E)); document.write(unescape(%3Cscript src='https://www.econjournals.com/lib/pkp/js/lib/jquery/plugins/jqueryUi.min.js' type='text/javascript'%3E%3C/script%3E)); } else { google.load(jquery; 1.4.4); google.load(jqueryui; 1.8.6); } International Journal of Economics and Financial Issues Open Journal Systems Journal Help User Username Password Remember me Notifications View Subscribe Journal Content Search Search Scope All Authors Title Abstract Index terms Full Text Browse By Issue By Author By Title Other Journals Font Size Information For Readers For Authors For Librarians Home About Login Register Search Current Archives Announcements EDITORIAL BOARD SUBMISSIONS INDEXING/ABSTRACTING CONTACT Home > Vol 7; No 5 (2017) > Demirel The Causality Relationships between Economic Confidence and Fundamental Macroeconomic Indicators: Empirical Evidence from Selected European Union Countries Selim Koray Demirel; Seyfettin Artan Abstract Economic confidence is an important tool in predicting macroeconomic changes. In this study; causality relationships between the confidence level and the fundamental macroeconomic indicators are analyzed using panel data analysis for 13 European Union countries for the period 2000: 1-2014: 12. According to the obtained results; a bidirectional causality relationship between the level of confidence and consumption expenditures; industrial production and inflation; a unidirectional relationship from the level of confidence to the unemployment rate; and a unidirectional relationship from interest rates to the level of confidence were detected. These results are compatible with the view that economic confidence is a leading indicator in explaining the changes in macroeconomic indicators.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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