MODELLING SUBJECTIVE VIEWS OF INDIVIDUALS ABOUT NATIONAL MACROECONOMIC PERFORMANCE

Abstract

The aim of this paper is to estimate the effect of the main macroeconomic indicators on opinion of individuals about economic situation in their country. Correlation and regression analysis was applied to the data about 43 economies in 2002-2021. The most positive subjective views of economic situation were before crisis years (in 2007 and 2016-2019). This paper confirms positive effect of economic growth on perceived national economic situation. The effect is stronger under high income inequality in the long run and in advanced economies in the short run. Some models suggest that acceleration of economic growth may also be important. Gross savings is another positive factor. The long-term effect of savings is stronger in countries with high income inequality and in 2013-2021 also in advanced economies. Correlation between opinion of people and current account is positive, but the regression analysis results show that this factor does not have a separate significant effect. Unemployment influences perceived national economic situation negatively. But earlier (in 2002-2012) this effect was weaker than in 2013-2021. The long-term effect is stronger in countries with high income inequality. The effect of inflation is negative, but it existed only in the first subperiod (2002-2012) in advanced economies. Then the fear of inflation disappeared at least before 2022, when inflation increased. Income inequality, its change and economic development level do not affect perceived economic situation themselves. But high income inequality increases sensitivity of people to trends in economic growth, unemployment and gross savings. High development level also increases such sensitivity and earlier in XXI century dependence on inflation.