The Predictive Power of the Index of Consumer Sentiment in Korea(Vol.8 No.2)
This paper examines the suitability of the consumer sentiment index for forecasting consumption expenditures in South Korea. The two most widely known measures of consumer sentiment in South Korea - from Samsung Economic Research Institute and the Bank of Korea - were used for empirical testing. Only the future consumption index released by the Bank of Korea was found to have some predictive power in forecasting consumption
growth. It needs to be recognized, however, that the predictive power of the future consumption index from the Bank of Korea is restrictied in that the formal announcement of the index is made one and half a months later than that of Samsung Economic Research Institute.