Business and Consumer Surveys: the Weighting Scheme

Abstract

The development of national economies is a popular theme nowadays. A great number of analysts focus on surveys which have an ability to predict a business cycle or the gross domestic product (GDP). Business and consumer surveys are ones of these popular instruments. These surveys have many advantages – results are published monthly, and they can identify the turning points in the economy. Of course, there are some areas left for improvement – for example, many analysts discuss the weighting scheme, a system of weights indicating an importance of individual parts of the surveys. Thanks to harmonisation, the weighting scheme is the same for all European countries. Unfortunately for some of them, it is not the best option because the weights do not suit the structure of the economy a very well. In this article, the authors want to construct a new weighting system for the calculation of the composite confidence indicator. Using this modified method, we could obtain a better prediction of the GDP, and could be better prepared for a potential future economic crisis.