Abstract:

The expectations of households have a significant impact on their current period decision-making behavior. In this study, it is aimed to investigate the linkage between households' expectations and household expenditure behavior in an empirically. In the analysis, expectations of households are represented by consumer sentiment index and the sub-components of this index, and consumption behavior are represented by total expenditures, durable, semi-durable, non-durable and service expenditures. In this context, baseline model, which investigates only the linkage between consumer sentiment index and household expenditures are estimated using the Vector Autoregressive (VAR) Method for the period 2009q1-2017q2. According to result, household consumption expenditure Granger causes on consumer sentiment index. Finally, incremental model with various control variables is estimated using by OLS method. The most important results obtained from the study are that (i) there is a statistically significant relationship between durable goods expenditures and the consumer centiment index (ii) only income and gold return ratio is statistically significant effect on consumption expenditure as a control variable.

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