Abstract:

The literature on consumer sentiment argues its leading role as consumer surveys try to extract information for the future path of economic agent behavior. Nevertheless, focusing on the forecasting power of consumer confidence rather than searching its functional identity has created a tendency for underestimating the importance of consumer surveys. Moreover, many studies concentrate on consumer confidence in advanced economies where the economic environment has historically been rather stable. However, in a dynamic emerging market like Turkey where the future is uncertain rather than risky consumer confidence should be modeled as an economic indicator including current and past information. This study is an unconventional one in the sense that it evaluates the functional identity of consumer sentiment. Our empirical findings show that movements in consumer confidence depend on changes in exchange rates, stock exchange index, manufacturing industry index and expectations measured through tendency in business environment

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