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Does Consumer Confidence Forecast Household Spending? The Euro Area Case

Dion, David Pascal (2006): Does Consumer Confidence Forecast Household Spending? The Euro Area Case.

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Abstract

The following analysis, based on error correction models, suggests that consumer confidence, together with traditional macroeconomic variables, contains a forecasting and explicative power on consumption. By including consumer confidence in a consumption function, consumer confidence releases a significant coefficient. Such a confidence-augmented consumption model provides good forecasting results.

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