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The quest for the best consumer confidence indicator - Andreas Jonsson and Staffan Lindén
Author(s): Andreas Jonsson and Staffan Lindén , European Commission
The quest for the best consumer confidence indicator - Andreas Jonsson and Staffan Lindén (697 kB)
Summary for non-specialists (77 kB)
We search through all possible consumer confidence indicators in order to find the single indicator that has the highest correlation with private consumption growth. Moreover, we contrast this indicator to the Consumer Confidence Indicator used by the European Commission, and some alternative indicators; also in terms of their predictive power of private consumption.
In this context, we test the hypothesis that an indicator based on questions related to the household, rather than the general economy, would prove informative. We find that this "micro" indicator, as well as an optimal indicator that takes into account the specifics of all EU member states, outperform the current Consumer Confidence Indicator. Both these indicators also perform better than an indicator based on the popular factor methodology.
JEL classification:E21, E27, E29
(European Economy. Economic Papers 372. March 2009.
Brussels. PDF. 35pp. Tab. Graph. Ann. Bibliogr. Free.)
| KC-AI-09-372-EN-N (online)||
|ISBN 978-92-79-11183-9 (online)||
|ISSN 1725-3187 (online)