Predicting the economic

public opinions in Europe

SYstemic Risk TOmography:

Signals, Measurements, Transmission Channels, and Policy Interventions

Maurizio Carpita, Enrico Ciavolino, Mariangela Nitti University of Brescia & University of Salento SYRTO Project Final Conference, Paris – February 19, 2016

Introduction Data Collection Models Results Conclusions

My Agenda

1

Introduction

Aim of the study

Steps of the study

2

Data Collection

Time Series

The European Economic Forecast

The Standard Eurobarometer Survey

Data Synchronization

3

Models

The CUB Model

The MIMIC Model

4

Results

CUB results: Goodness of fit

CUB results: Estimates

MIIMIC results: Goodness of Fit

MIMIC results: path coeff. for economic causes

MIMIC results: path coeff. for perception indicators

MIMIC-CUB results: latent variable estimate

5

Conclusions

Principal evidences

Future Developments

Acknowledgement

Introduction Data Collection Models Results Conclusions

Aim of the study

To use the Latent Variable (LV) Models to describe how thenews about the forecast for the macro-economic situationcould affect the economic perception of the European citizens.

Introduction Data Collection Models Results Conclusions

Steps of the study

1 Collect time series of european data about the citizens’opinion about economy and the macro-economic forecast.

2 Estimate the citizens’ perception using the CUB Model.3 Estimate the relationships between the macro-economic

forecasts and the citizen’s perception using the MIMICModel with the PLS-PM estimation approach.

4 Evaluate the variation of the relationships over the time.

Introduction Data Collection Models Results Conclusions

Time Series

The data refers to 27 EU Countries from 2005 to 2014

The European Economic Forecast of four key economicindicators, published in the winter, spring and autumn:

X1 Gross domestic product per capita (GDP);X2 Unemployment rate (Unemp);X3 Harmonised Index of Consumer Prices (HICP);X4 Gross Debt, general government as % of GDP (Debt).

The Eurobarometer Standard Survey of two economicpublic opinion, published in spring and autumn:

Y1 The current situation of the (NATIONALITY) economy;Y2 The current situation of the European economy.

Introduction Data Collection Models Results Conclusions

The European Economic Forecast

Introduction Data Collection Models Results Conclusions

The Standard Eurobarometer Survey

The answer has two

categories: Total good,

Total bad.

The pie compares the

answers of the EU (outer

pier) and Italy (Inner pie).

The EU citizens’ opinion is

improved, while the Italian

opinion get worse (Spring

2014 / Autumn 2013).

Introduction Data Collection Models Results Conclusions

Data Synchronization

The figure shows the temporal synchronization of themacro-economic forecast and the citizens’ opinion.

Introduction Data Collection Models Results Conclusions

The CUB Model

The CUB Model have been introduced in the literature tomodelling ordinal (rating or ranking) data by a mixture of twocomponents of the respondent’s psychological decision process:

one Binomial random variable, modelling the feeling andone Uniform random variable, modelling the uncertainty

We use the feeling parameter as an estimate of the perceptionof the citizens about the National and European economies

Introduction Data Collection Models Results Conclusions

The MIMIC Model

⇠ : The European economy’s health state

Introduction Data Collection Models Results Conclusions

CUB results: Goodness of fit

There is an improvement (reduction) of the DISS index over time

Introduction Data Collection Models Results Conclusions

CUB results: Estimates

Introduction Data Collection Models Results Conclusions

MIMIC results: Goodness of Fit

There is an improvement of the R2 and GoF over the time

Introduction Data Collection Models Results Conclusions

MIMIC results: path coeff. for economic causes

Introduction Data Collection Models Results Conclusions

MIMIC results: path coeff. for perception indicators

Introduction Data Collection Models Results Conclusions

MIMIC-CUB results: latent variable estimate

The figure shows theEuropean economy’s health state by countries

Introduction Data Collection Models Results Conclusions

Principal evidences

The CUB Model can be a good way to estimate thecitizens’ perception of the economic situation when the"uncertanty" is lower (as in this case of study);The MIMIC Model can be useful to describe how theforecast (news/announcements) about the macro-economicsituation influences perception;The MIMIC-CUB Model shows over time an improvementin explain the relationship between the macro-economicindicators and the citizens’ perception;The MIMIC-CUB Model can be used to estimate theEuropean economy’s health state.

Introduction Data Collection Models Results Conclusions

Future Developments

The 3rd-order MIMIC Model

This project has received funding from the European Union’s

Seventh Framework Programme for research, technological

development and demonstration under grant agreement n° 320270

www.syrtoproject.eu

This document reflects only the author’s views.

The European Union is not liable for any use that may be made of the information contained therein.