Economic determinants of Croatian consumer confidence: real estate prices vs. the macroeconomy

This article provides a starting point for the analysis of the determinants of consumer confidence in Croatia. Using Autoregressive Distributed Lag models, we analyse a wide array of macroeconomic drivers of consumer confidence. Despite the well-established fact that the Croatian economy is highly dependent of the real estate sector, consumers seem not to significantly react to real estate prices. On the other hand, we do find some evidence of a considerable long run impact of real wages, interest rates, and the general price level. In the short run, consumer confidence seems to also be responsive to stock market developments and unemployment. Overall, our estimates show that macroeconomic factors explain a lion's share of variability in consumer confidence.