Economic Sentiment in Europe: Disentangling Private Information from Public Knowledge

Axel Lindner and Katja Heinisch

VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy from Verein für Socialpolitik / German Economic Association

Abstract: This paper addresses a general problem with surveys asking agents for their assessment of the state of the economy: answers are highly dependent on information that is publicly available, while only information that is not already publicly known has the potential to improve a professional forecast. We propose a simple procedure to disentangle the private information of agents from knowledge that is already publicly known (that is common knowledge) for surveys that are structured like that for the European Commission's consumer sentiment indicator. We show that, empirically, this procedure works quite well for some economies, in particular for Germany.

Keywords: private information; public information; consumer confidence; survey data (search for similar items in EconPapers)
JEL-codes: C83 D12 E32 E37 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eec and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc19:203501

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