A Comparison of Economic Expectations In Germany and Turkey: An Analysis of ZEW and Economic Trust Index Sentiment Indicators

Hakan Eryüzlü and Sertaç Hopoğlu

Alphanumeric Journal, 2020, vol. 8, issue 1, 131-142

Abstract: The “economic sentiment” indices, which reflect the short-term outlook of an economy, have been used in some developed countries for many years. The ZEW index created by the European Economic Research Center in Germany (Zentrum für Europäische Wirtschaftsforschung-ZEW) is one of these indices and is used as an indicator of the short-term prospects of the German economy. Economic Confidence Index (EGE) is a similar tool applied by the Turkish Statistical Institute (TÜİK) in Turkey with the same purpose. This study aims to investigate whether economic expectations in Germany, Turkey’s most important foreign trade partner, affect expectations in Turkey. For this purpose, causality test developed by Hacker and Hatemi-J (2006) and causality test developed by Hatemi-J (2012) were applied to monthly ZEW and EGE index data for 2007: 01-2019: 05 period. The results suggest that in case of worsening of expectations for the German economy expectations about the Turkish economy also worsen; however, positive expectations about the German economy always do not always lead to optimism in the Turkish economy.

Keywords: Economic Confidence Index; Economic Expectations; Trade; ZEW Confidence Index (search for similar items in EconPapers)
JEL-codes: C51 C52 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:anm:alpnmr:v:8:y:2020:i:1:p:131-142

DOI: 10.17093/alphanumeric.590209

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