Question 13.12

13.12 Consumer sentiment index.

Each month, the University of Michigan and Thomson Reuters conduct a survey of consumer attitudes concerning both the present situation as well as expectations regarding economic conditions. The results of the survey are used to construct a Consumer Sentiment Index. The index has been normalized to have a value of 100 in December 1964. Consider the monthly values for the index from January 2000 to January 2014.7

umcsent

664

  1. Test the randomness of the index series. What do you conclude?
  2. Obtain the first differences for the series and test them for randomness. What do you conclude?
  3. Would you conclude that the consumer index series behaves as a random walk? Explain.
  4. Make a forecast for the value of the index for February 2014.