ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Do confidence indicators lead Greek economic activity?

Dimitriou Dimitrios, Pappas Anastasios, Kazanas Thanassis and Kenourgios Dimitris

Correspondence: Dimitriou Dimitrios,

Department of Economics, National and Kapodistrian University of Athens, Greece

pdf (863.55 Kb) | doi:


In this paper, we evaluate the role of several confidence indicators (i.e., Economic Sentiment Indicator, Consumer Confidence Indicator, Construction Confidence Indicator and Industrial Confidence Indicator) as leading indicators to GDP and its components such as Investments and Private Consumption. Our econometric evaluation performed by popular techniques such as: i) rolling correlation methodology ii) Granger causality iii) ARIMA benchmark model and iv) Kalman filter technique. The results suggest that the inclusion of confidence indicators does not improve substantially the forecasting ability of our econometric models as far as macroeconomic variables are concerned. Thus, we conclude that there is space for improvement of the predictive power of confidence indicators in Greece.


  Confidence indicators; GDP; Granger causality; ARIMA; forecasting


Box, G.E.P, and G.M. Jenkins (1976) Time series analysis: Forecasting and control. Rev. ed. San Francisco. Holden-Day.

Brinca Pedro and Stephane Dees (2013) Consumer confidence as a predictor of consumption spending: Evidence for the United States and the Euro area. International Economics, issue 134, pages 1-14.

Christiansen, C. , Eriksen, J. , and Moller, S. (2014) Forecasting US recessions: The role of sentiment. Journal of Banking & Finance, 49 , 459–468.

Clark, M.J. (1917) Business acceleration and the law of demand: A technical factor in economic cycles. Journal of Political Economy, No 25, pp. 217-235.

Cotsomitis, J. and Kwan, A. (2006) Can consumer confidence forecast household spending? Evidence from the European commission business and consumer surveys. Southern Economic Journal, 72(3), pp. 597–610.

Croushore D. (2005). Do consumer-confidence indexes help forecast consumer spending in real time? The North American Journal of Economics and Finance 16, pp.435–450.

Croux C., Gelper S. and Wilms I. (2016) The predictive power of the business and bank sentiment of firms: A high-dimensional Granger Causality approach. European Journal of Operational Research 254, pp.138–147.

ECB (2006) Monthly Bulletin, February.

Klein, L.R. and Özmucur, S. (2010) The use of consumer and business surveys in forecasting. Economic Modelling, vol. 27(6), pp. 1453-1462.

Lozza, E., Bonanomi, A., Castiglioni, C. and Bosio A. C. (2016) Consumer sentiment after the global financial crisis. International Journal of Market Research Vol. 58 Issue 5, pp. 671-691.

Mourougane, A. and Roma, M., (2003) Can confidence indicators be useful to predict short-term real GDP growth. Applied Economics Letters Vol. 10, Issue 8.

Pigou, A. (1927). Industrial Fluctuations. Macmillan, London.

Santero T. and Westerlund, N. (1996). Confidence indicators and their relationship to changes in economic activity. OECD, Working paper No. 170.