Consumer confidence and economic growth: case studies of Jamaica and Trinidad and Tobago

Abstract

This study examined the causal link between consumer confidence and GDP in Jamaica and Trinidad and Tobago in the context of the vector autoregression (VAR) methodology. The interest rate and exchange rate were also included in the model as control variables. In the case of Jamaica, remittances were included due to its importance in the economy. The study argued that consumer confidence indices can be useful in economic forecasting, policymaking and business planning in Jamaica and Trinidad and Tobago. This usefulness is, however, built on the assumption that the index leads (or causes) aggregate economic conditions.