Do Confidence Indexes Consider The Available Macroeconomic Information on Short Term?

摘要

The question whether investors are rational or irrational has already been extensively discussed in specialized literature. But no final answers were received during the few decades of research. This paper represents a research of what factors influence investors' opinions regarding expectations of future evolution of an economy. This subject is important because investors' overconfidence can cause economic bubbles that may severely affect a capital market (Brown and Cliff, 2004). A lack of confidence may also have a series of negative impacts on a market. The study focuses on Romania, by using the CFA Romania Macroeconomic Confidence Index in an empirical research to find whether past events influence financial analysts regarding future expectations and which of these factors influence them most. The sample of research consists of three years of monthly data regarding the CFA Romania Macroeconomic Confidence in correlation with a few distinct macroeconomic figures (monthly information about unemployment rate, average personal income, inflation rate, short term interest rates, index performance for Bucharest Stock Exchange, foreign direct investments in Romania as well as Romanian business condition). After performing the Jarque-Bera test of normality and after testing the data for autocorrelation, cross correlation, multicollinearity, the analysis of correlation and regression was performed. The conclusion is that financial analysts are influenced by past economic data in the moment they form their expectations about future economic conditions. As a result, they may be considered as being rational. There is a high correlation between the CFA Romania Macroeconomic Confidence Index and the considered macroeconomic indicators.