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Business Cycles and the Role of Confidence: Evidence from Europe

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posted on 2009-05-12, 15:57 authored by Bob McNabb, Karl B. Taylor
Using an under-utilised dataset on consumer and business confidence indicators across the UK, France, Italy and the Netherlands, this paper considers the extent to which such indicators are linked to GDP and the business cycle. We adopt, cross correlation descriptive statistics, Granger causality tests, variance decomposition, and forecast probit tests to investigate the properties of the data. In general consumer and business confidence indicators are leading indicators and pro-cyclical. There is some evidence of causality between the indicators and GDP and confidence indicators would appear to have good predictive power of cycle turning points in relation to other leading indicators.

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Publisher

Dept. of Economics, University of Leicester

Available date

2009-05-12

Publisher version

https://www.le.ac.uk/economics/research/discussion/papers2002.html

Book series

Papers in Economics;02/3

Language

en

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