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THE USEFULNESS OF CONSUMER CONFIDENCE IN FORECASTING HOUSEHOLD SPENDING IN CANADA: A NATIONAL AND REGIONAL ANALYSIS
Author(s) -
KWAN ANDY C.C.,
COTSOMITIS JOHN A.
Publication year - 2006
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbi064
Subject(s) - consumer confidence index , personal consumption expenditures price index , economics , consumption (sociology) , consumer spending , index (typography) , econometrics , demographic economics , public economics , macroeconomics , social science , sociology , world wide web , computer science , recession
We examine the ability of the Conference Board of Canada's Index of Consumer Attitudes (ICA) to forecast Canadian household spending both nationally and regionally. Our results indicate that at the national level, the ICA is able to predict total personal consumption expenditures and various subcategories of consumer spending, even when controlling for other macroeconomic variables. We find, however, that the forecasting ability of the regional indices is somewhat weaker when compared to that of the national ICA. Overall, our results reconfirm that consumer confidence is a reliable predictor of household spending in Canada. (JEL C53 , E21 )

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