"Forecasting macroeconomic conditions using consumer sentiment survey data"
Accurately predicting a turning point in the business cycle saves jobs and resources; it is an important policy priority. This project will determine how to design the consumer sentiment survey so as to generate the most accurate macroeconomic forecast. OCEA will commence conducting a consumer sentiment survey in March 2013. The survey will elicit expectations of future economic conditions by two question formats. The direct question format is the standard question used in consumer sentiment surveys worldwide. The implied format is novel. It exhibits greater internal validity than the direct format in cross-sectional studies, but its forecasting ability has not previously been tested. The PhD student will apply a validated model of household spending to test which format has greater explanatory power. The student will be trained to perform this test and analyse its results at Stirling's economics division. Throughout the project, the student and academic supervisors from Stirling will give papers, workshops and masterclasses at OCEA on topics related to the research, thereby building capacity within OCEA and testing academic knowledge in a policy setting. The project will yield a decisive answer to a methodological question that has important policy implications. The results will be immediately applicable to OCEA and will have implications for the design of consumer sentiment surveys throughout the world. The thesis is anticipated to produce three A journal articles, which is consistent with the research output of the lab responsible for the student's supervision, Stirling's Behavioural Science Centre.
Contact: David Comerford (Economics, Stirling)
Collaborating Partner: OCEA, Scottish Government