Research Discussion Papers, Bank of Finland
No 20/1997:
Macroeconomy and Consumer Sentiment: Performance of the Finnish Consumer Barometer after Ten Years
Kari Djerf and Kari Takala ()
Abstract: The Finnish Consumer Barometer was introduced in autumn
1987. Data were first collected twice a year and from August 1991 until
September 1995 quarterly. After Finland joined the European Union in 1995,
the survey was adopted as one member of the Harmonised Consumer Survey of
the European Communities. Since October 1995, data have been collected
monthly. Performance of the Consumer Barometer has already been evaluated
by means of descriptive studies (see Djerf 1990). As the survey matures, it
becomes feasible to make a more thorough study on the usefulness of the
survey. Here we are, for example, interested in investigating how consumers
were able to predict the long-lasting recession of our economy. The
consumer confidence index and the five questions used for calculating it
are compared to various components of Finnish macroeconomic time series.
Additionally, we analyse the coincidence of other common measures
(unemployment expectations, inflation expectations, etc.) as well as other,
less frequently studied indicators such as the willingness to save and
borrow with their possible counterparts in the real economy. It is
important to evaluate whether consumer assessments about different economic
questions are useful in predicting various macroeconomic variables i.e. we
look for the additional information contained in barometer answers. We end
by considering the usefulness of various indicators for specific
macroeconomic behavioural equations.
Keywords: consumer barometer; economic forecasting; causality testing; (follow links to similar papers)
37 pages, December 22, 1997
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