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On the empirical relations between producers expectations and economic growth

Author

Listed:
  • Juan G Brida

    (Facultad de Ciencias Económicas y de Administración UdelaR)

  • Bibiana Lanzilotta

    (Facultad de Ciencias Económicas y de Administración UdelaR)

  • Lucia I Rosich

    (Facultad de Ciencias Económicas y de Administración UdelaR)

Abstract
This study analyses the common trends between expectation indicators of producers of the manufacturing sector in Uruguay and its linkage with economic growth. To this end, four expectation indicators are constructed from qualitative data obtained using surveys collected by the “Cámara de Industrias del Uruguay†(CIU) for the period 1998- 2017. Common trends are identified by estimating Multivariate Structural Models on the expectations indicators (categorized in four groups according to the firm specialization and international insertion). Its dynamical linkage with Gross Domestic Product (GDP) growth is analyzed by applying non-parametric cointegration and causality tests. Results give evidence of bidirectional causality between expectations and GDP growth in the long, while in the short-run causality goes uniquely from the exporters' sentiment indicator trend to the GDP growth. The expectation trend of the more tradable and exposed to international competition sectors (exporter industries) is the one that drives overall industrials' expectations in Uruguay. More importantly, we cannot reject nonlinearity in the long-run relationship between the underlying trend of exporters' expectations and Uruguayan GDP growth, which shows that it may be a useful predictor of GDP growth provided that this nonlinearity is taken into account.

Suggested Citation

  • Juan G Brida & Bibiana Lanzilotta & Lucia I Rosich, 2021. "On the empirical relations between producers expectations and economic growth," Economics Bulletin, AccessEcon, vol. 41(3), pages 1970-1982.
    • Handle: RePEc:ebl:ecbull:eb-21-00393
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    References listed on IDEAS

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    More about this item

    Keywords

    sentiment indicators; agents' expectations; common factors; Multivariate Structural Models; GDP forecasting; nonlinear cointegration;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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