The Consumer confidence index and short-term private consumption forecasting in Peru

Leonidas Cuenca, Julio Flores and Daniel Morales
Additional contact information
Leonidas Cuenca: Apoyo Consultoría
Julio Flores: Apoyo Consultoría
Daniel Morales: Rímac Seguros

No 2013-004, Working Papers from Banco Central de Reserva del Perú

Abstract: The Consumer Confidence Index of APOYO Consultoría (INDICCA) is computed based on the responses to ten questions of a monthly survey in the city of Lima which aim to reflect the consumers’ spending intentions. We evaluate some sub-components of INDICCA in terms of their predictive and explanatory power of private consumption. In this process, we also evaluate the disaggregation on socioeconomic levels of this index, and a synthetic indicator of confidence based on dynamic factor models suggested by Jonsson and Lindén (2009) as an alternative way to combine the information contained in the sub-components of this index. We find that the explanatory and predictive power of private consumption models in Peru is enhanced when consumer confidence indices are included. However, this improvement is only marginal when other control variables such as employment or inflation are added. In particular, the optimal consumer confidence indicator is the synthetic indicator constructed with the dynamic factor model procedure. The results presented in this paper, although valid for some sub-components, are still inconclusive for the overall INDICCA.

Keywords: consumer confidence; consumer tendency surveys; private consumption; forecasting (search for similar items in EconPapers)
JEL-codes: C22 E21 E27 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-for and nep-mac
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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