Are consumer sentiments useful in Japan? An application of a new market-timing test

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We investigate whether consumer sentiment in Japan is a useful predictor of household consumption, durable goods consumption and the CPI using a recently developed market-timing test. We find that consumer sentiment is not useful for predicting an increase/decrease in household consumption, durable goods consumption, and CPI. The findings suggest that policy-makers may have difficulties obtaining useful qualitative information from consumers. However, using estimated threshold values for the increase/decrease, consumer sentiment became a useful predictor of durable goods consumption and CPI. This suggests that estimating relevant thresholds could enhance the use of directional analysis.

Original languageEnglish
Pages (from-to)356-359
Number of pages4
JournalApplied Economics Letters
Volume21
Issue number5
DOIs
Publication statusPublished - 2014

Keywords

  • consumption
  • directional analysis
  • household
  • market-timing test
  • survey data

ASJC Scopus subject areas

  • Economics and Econometrics

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