Evaluating consumer sentiments as predictors of UK household consumption behavior: Are they accurate and useful?

Evaluating consumer sentiments as predictors of UK household consumption behavior: Are they accurate and useful?

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Article ID: iaor20053206
Country: Netherlands
Volume: 20
Issue: 4
Start Page Number: 671
End Page Number: 681
Publication Date: Oct 2004
Journal: International Journal of Forecasting
Authors: ,
Keywords: forecasting: applications
Abstract:

This paper investigates empirically whether consumer sentiments indices, based on surveys compiled by GfK, forecast household consumption types for the UK. Firstly, we use a quantitative equation approach to assess whether the indices are able to forecast household consumption growth in addition to traditional variables, which are included as control variables. Subsequently, using qualitative directional analysis, we investigate whether the indices are accurate and useful predictors as well. We find that, broadly speaking, both the headline, or aggregate, and the major purchasing indices have some predictive powers in addition to the control variables and are also directionally accurate and useful.

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