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Business cycles and the role of confidence: evidence for Europe

Taylor, Karl and McNabb, Robert 2007. Business cycles and the role of confidence: evidence for Europe. Oxford Bulletin of Economics and Statistics 69 (2) , pp. 185-208. 10.1111/j.1468-0084.2007.00472.x

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This paper examines whether indicators of consumer and business confidence can predict movements in GDP over the business cycle for four European economies. The empirical methodology used to investigate the properties of the data comprises cross-correlation statistics, implementing an approach developed by den Haan [Journal of Monetary Economics (2000), Vol. 46, pp. 3–30]. The predictive power of confidence indicators is also examined, investigating whether they can predict discrete events, namely economic downturns, and whether they can quantitatively forecast point estimates of economic activity. The results indicate that both consumer and business confidence indicators are procyclical and generally play a significant role in predicting downturns.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
ISSN: 14680084
Last Modified: 04 Jun 2017 01:46

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