Consumer Confidence Indices and Financial Volatility

Hatice Karasoy Can

CBT Research Notes in Economics from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: [EN] Real economic activity data, specifically private consumption, is published with a considerable time lag. This makes indicators with shorter publication lags quite popular for policy makers as well as the public. In this regard, the confidence indices which are released monthly are followed closely; and their signals on private consumption and economic activity are interpreted carefully. This note investigates the factors that affect confidence indices. It is well-established that confidence indices are sensitive to developments in financial markets. This analysis shows that they are also affected by financial volatility. The domestic volatility indicators of financial variables such as exchange rate, interest rate, and BIST (stock exchange), and VIX index which essentially represent external financial volatility deteriorate consumer sentiment. Moreover, it is found that confidence indices are affected much more from inflation dynamics compared to the economic activity in the short run. The strong relation between confidence and volatility points out that the policies aimed at stability in financial markets may also improve consumption tendency. [TR] Reel iktisadi faaliyete iliskin veriler, ozellikle de ozel tuketim, oldukca gecikmeli olarak aciklanmaktadir. Bu yuzden daha zamanli aciklanan gostergelere politika yapicilar ve kamuoyu tarafindan onem atfedilmektedir. Aylik olarak aciklanan tuketici guven endeksleri bu baglamda yakindan takip edilmekte, tuketime ve iktisadi faaliyete iliskin verdikleri sinyaller dikkatle yorumlanmaktadir. Bu not guven endekslerinin hangi faktorlerden etkilendigini sorgulamaktadir. Finansal degiskenlere hassasligi bilinen guven endekslerinin finansal oynakliga da duyarli olduklari gosterilmistir. Doviz kuru, faiz orani, BIST endeksine iliskin olusturulan yurt ici finansal oynaklik gostergeleri ile yurt disi finansal oynakligi temsil eden VIX endeksi, guven endekslerini olumsuz yonde etkilemektedir. Bunun yaninda, guven endeksleri kisa vadede ekonomik aktiviteden cok enflasyon gelismelerinden etkilenmektedir. Guven ve oynaklik arasinda bulunan guclu iliski finansal piyasalarda istikrari hedef alan politikalarin, tuketim egilimi acisindan da onemli oldugunu vurgulamaktadir.

Date: 2015
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