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Would information on consumer confidence have helped to predict UK household expenditure during the recent economic crisis?

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Over the duration of the long run, the amount of expenditure which is undertaken by households is necessarily constrained by economic and financial considerations. However, over the course of the short run, it is conceivable that this form of spending is determined additionally by psychological factors. To the extent that a measure of consumer confidence at least partly reflects the prevailing mood of a representative sample of households, such a possibility has encouraged numerous researchers to investigate whether or not predictions of consumption expenditure can be improved upon by making use of consumer survey data. Indeed, in the review article by Curtin (2007), reference is made to thirty-five studies which have sought to examine the forecasting capabilities of intentions data. The respective publication years range from 1955 to 2004, such that the collection includes the seminal contributions of Carroll et al. (1994) and Ludvigson (2004). Subsequently, empirical analysis has been conducted in this area by, inter alia, Cotsomitis and Kwan (2006), Jonsson and Linden (2009) and Al-Eyd et al. (2009). Emphasis is given to these three papers for the reason that, in terms of the data that form the basis of the results, they show the closest relationship to the current inquiry
Original languageEnglish
Pages (from-to)1695-1709
JournalApplied Economics
Volume48
Issue number18
Early online date5 Nov 2015
DOIs
Publication statusPublished - 2016

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