Confidence Indicators and Their Relationship to Changes in Economic Activity

Teresa Santero and Niels Westerlund

No 170, OECD Economics Department Working Papers from OECD Publishing

Abstract: This paper examines the usefulness of consumer and business surveys in assessing the cyclical position of the economy and for forecasting output movements. To that effect, after a brief review of the nature of sentiment measures, the empirical relationship between confidence indicators and output components is explored. Graphical examination, correlation analysis and Granger causality tests are used to asses that relationship. The paper finds that sentiment measures obtained from business surveys provide valuable information for the assessment of the economic situation and forecasting. However, the relationship between sentiment indicators and output varies considerably across countries and sentiment measures. It is also found that consumer confidence indicators are much less useful than business confidence indicators for economic analysis due to their much looser relationship with output movements ... Ce document examine l’utilité des enquêtes auprès des entreprises et des consommateurs dans les évaluations de la conjoncture et les prévisions des fluctuations de la production. A cette fin, après un bref examen de la nature des indicateurs de confiance, on analyse leur relations empiriques avec les composantes du PIB. Cette note s’appuie sur une étude graphique, correlations et sur des tests statistiques de causalité (Granger). La principale conclusion de cette étude est que les indicateurs du climat des affaires donnent des informations précieuses sur la situation économique courante et sur les perspectives à court terme. Il faut, cependant, noter que la relation entre ces indicateurs et la production est très differente selon les pays et selon la mesure de la confiance choisie. En outre, il apparaît que les indicateurs de confiance des consommateurs sont généralement moins étroitement liés aux fluctuations de la production que les indicateurs du climat des affaires, ce qui en ...

Date: 1996-01-01
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