European Integration in the Light of Business and Consumer Surveys

The process of European integration has necessitated the analysis of the economic convergence between the old and new member states of the European Union (EU). To this end, this paper examines business and consumer surveys (BCS) through the prism of the economic convergence of new member countries. The main aim of this paper is to analyze whether the quality of BCS indicators in transition countries is comparable to the quality of those in developed European countries. This paper provides several extensions to other related BCS studies: (1) it is the first empirical paper to observe each specific BCS indicator and its sector-related macroeconomic variable at the EU level; (2) the data set is extensive, comprising all EU members; and (3) the analysis is based on the recent panel vector autoregressive methodology. It is found that new member states' indicators exhibit pronounced predictive properties and can be used as leading indicators of related macroeconomic variables for even four quarters ahead. This shows that they are as efficient as the indicators in EU15 and that the Joint Harmonised EU Programme of Business and Consumer Surveys is fully justified on its fiftieth jubilee.