INFORMATION CONTENT OF CONSUMER SENTIMENT IN TURKEY

Abstract

Even though consumer confidence/sentiment indices are measured in many developed and developing countries, the vast literature on consumer confidence focus on the behavior of the indices for developed economies in order to show whether these indices have some predictive power in terms of estimating the future path of consumption, hence final domestic demand. When comparing the economic environment of both developed and developing countries, the differences in expectation formation of consumers in developed and developing countries are remarkable due to the high sensitivity of consumers in developing countries to the level of income. In this context, this paper analyzes the effects of the expectation and tendency components of consumer sentiment on real final domestic demand for the Turkish case using some econometric techniques. Employing consumer confidence measures of CNBC-e and CBRT-TURKSTAT, this study also assesses the information content of these indices for the global crisis period

Keywords

• Consumer Confidence, Consumer Expectations, Unit Root, Cointegration

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