Introducing a New Index of Households' Macroeconomic Conditions

Martin Hodula, Simona Malovana and Jan Frait ()

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: We construct a novel index of households' macroeconomic conditions for 22 high-income European countries between 2002 Q1 and 2018 Q4. The resulting index is in line with the broad features of the countries' business cycles and captures households' economic well-being. We discuss the complementary character of the proposed index in relation to widely employed survey-based consumer confidence indicators. We show that households' expectations are tightly linked to current macroeconomic conditions. This finding echoes the literature linking consumer attitudes and economic development. In a single-country case study, we provide empirical evidence that links the proposed index to new credit extended to households. The evidence suggests that households need a longer period of good macroeconomic conditions to decide to take on a mortgage than they do in the case of a consumer loan.

Keywords: Composite index; factor analysis; households' confidence; loan growth (search for similar items in EconPapers)
JEL-codes: F12 F41 F43 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-eec and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2019/10

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