What drives consumer confidence?
|Author:||Mgr. Miroslava Mičáková|
|Year:||2015 - summer|
|Leaders:|| prof. Roman Horváth Ph.D.
|Work type:|| Finance, Financial Markets and Banking
|Awards and prizes:|
|Abstract:||In this thesis, we aim to analyze the determinants of consumer confidence in 17
EU countries. We propose that the following variables could have a significant effect
on consumer confidence in the EU: GDP growth, inflation rate, interest rates,
unemployment and stock market performance. We estimate heterogeneous panel
data models in static and dynamic specifications. For the static specification, we
apply Mean Group, Common Correlated Effect MG and Augmented MG estimators.
We find evidence that most variables have a significant relationship with the
consumer confidence indices with the coefficients exhibiting theoretically correct
signs. We also specify an ARDL model and use 3 estimators (Mean Group, Pooled
MG and Dynamic Fixed Effect) to examine the long- and short-term effects of
selected variables on consumer confidence. We find that the long-run coefficients
results are highly sensitive to the choice of the estimation method. However, the
speed of adjustment term is significantly negative in all three estimators. We also
report country-level regression results which suggest that the impact of the selected
variables on consumer confidence varies accross countries.