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Can Consumer Confidence Data Predict Real Variables? Evidence from Croatia

Author

Listed:
  • Marija Kuzmanovic

    (European Bank for Reconstruction and Development, London, U.K.)

  • Peter Sanfey

    (European Bank for Reconstruction and Development, London, U.K.)

Abstract

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 and that expectations about forthcoming major purchases have 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 explain and forecast the real economy.

Suggested Citation

  • Marija Kuzmanovic & Peter Sanfey, 2013. "Can Consumer Confidence Data Predict Real Variables? Evidence from Croatia," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 15(1), pages 5-24, April.
    • Handle: RePEc:iez:survey:ces-v15_04-2013_kuzmanovic-sanfey
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    References listed on IDEAS

    as
    1. Stephane Dees & Pedro Soares Brinca, 2013. "Consumer confidence as a predictor of consumption spending: Evidence for the United States and the Euro area," International Economics, CEPII research center, issue 134, pages 1-14.
    2. 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.
    3. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
    4. Katalin Bodnár, 2010. "Household consumption expenditures and the consumer confidence index," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 5(1), pages 6-19, March.
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    Cited by:

    1. Thomas Lux & Duc Thi Luu & Boyan Yanovski, 2020. "An analysis of systemic risk in worldwide economic sentiment indices," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(4), pages 909-928, November.
    2. Mauricio Alvarado & Gabriel Rodríguez, 2024. "Time-Varying Effects of Financial Uncertainty Shocks on Macroeconomic Fluctuations in Peru," Documentos de Trabajo / Working Papers 2024-531, Departamento de Economía - Pontificia Universidad Católica del Perú.
    3. Marina Matosec & Zdenka Obuljen Zoricic, 2019. "Identifying the Interdependence between Consumer Confidence and Macroeconomic Developments in Croatia," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 17(2-B), pages 345-354.

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    More about this item

    Keywords

    consumer confidence; Croatia;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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