CONSUMER CONFIDENCE INDICATOR AS A LEADING INDICATOR OF CHANGES IN RETAIL TRADE TURNOVER

Mirjana Čižmešija and Zrinka Orlović
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Zrinka Orlović: University of Zagreb, Faculty of Economics and Business Zagreb

Ekonomski pregled, 2018, vol. 69, issue 1, 3-19

Abstract: The aim of the paper is to empirically examine the relationship between turnover in retail trade and the Consumer Confidence indicator on the aggregate level of the European Union (EU) and on the aggregate level of Euro zone (EA). The Consumer Confidence Indicator, CCI is a composite indicator of consumers’ assessments and expectations in EU and EA. In research, the possibility of forecasting the direction of changes in retail trade turnover is examined, not the intensity of change. The relationship between planned (according to the changes in CCI) and accomplished changes in turnover in retail trade (on a yearly basis) for different time lags is also examined. With this purpose in mind, the VAR model is used in the analysis, along with the Granger causality test, confusion matrix and the Hi-square test of no association in contingency tables. It has been noted that the changes in CCI precede the changes in retail trade turnover with two (for the EU) and three (for EA) months and that their planned and achieved changes are significantly correlated. In around 80% of cases, the changes for the time lags mentioned above (on a yearly basis) have the same direction. In addition, the rolling window correlation coefficients reveal that the relationship between these two variables is instable through time.

Keywords: Consumer Confidence Indicator; Turnover in the retail trade; VAR Model; Granger Causality test; Confusion Matrix; Rolling-Window Correlation (search for similar items in EconPapers)
JEL-codes: C53 D12 E32 (search for similar items in EconPapers)
Date: 2018
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