Macroeconomic implications of Hungarian consumer and business confidence
Abstract
The aim of the study is twofold: on the one hand, we examine how macroeconomic stability/uncertainty affects the real economy in Hungary, and on the other hand, which specific macroeconomic factors influence uncertainty itself. According to our results, the level of confidence is significantly affected not only by the levels of economic indicators but also by their fluctuations: the greater the volatility of macroeconomic variables, the lower the level of confidence. The fluctuations of inflation, the exchange rate, wage growth and the interest rate environment also shape the confidence of economic agents. Furthermore, Granger-causality and cointegration–error-correction models show that confidence indicators carry substantial additional information for modelling real economic processes. In this way, we link uncertainty to the evolution of the real economy through confidence indices: lower uncertainty, via stronger confidence, supports consumption and investment; in household and corporate decision-making, stability is a value in itself.
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