Publication: Determinants of consumer confidence in emerging economies: a panel cointegration analysis
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Date
2010
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Abstract
This study aims to analyze the relationship between consumer confidence and economic
growth in six emerging economies, namely Brazil, China, Mexico, Poland, South Africa and
Turkey. The relationship between consumer confidence and economic activity in developed
markets has been well documented (Carroll et al., 1994, Howrey, 2001 and Ludvigson, 2004).
However, to our knowledge, there are hardly any studies which assess the validity of this
theoretical framework for households in emerging economies. We propose that there are two
different variables that could play a significant role on consumer confidence in emerging
economies as economic variables that measure production and financial variables that reflect
the relationship between consumer confidence and financial markets. This study uses panel
data analysis via conducting panel unit root and cointegration tests. Our empirical findings
show that consumer confidence, industrial production and stock exchange have a long-run
relationship in emerging economies. Moreover, households in emerging and developed
markets exhibit similar behavior.
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Keywords
Consumer Confidence, Emerging Markets, Financial Market Variables, Panel Cointegration.