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Covid-19 outbreak and beyond: The information content of registered short-time workers for GDP now- and forecasting

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Abstract

The number of employees historically filed and registered from January to April 2020 for short-time compensation is used to obtain a nowcast for GDP growth in the first quarter and an outlook until the third quarter 2021. We purge the monthly log level series from the systematic component to extract unexpected changes or shocks to log short-time workers. These monthly shocks are included in a univariate model for quarterly GDP growth to capture timely, current-quarter unexpected changes in growth dynamics. Included shocks explain additionally 24% in GDP growth variation. The model is able to forecast quite precisely the decrease in GDP during the financial crisis. It predicts a mean decline in GDP of 5.7% over the next two quarters. Without additional growth stimulus, the GDP level forecast remains persistently 4% lower in the long run. The uncertainty is large, as the 95% highest forecast density interval covers a decrease in GDP as large as 9%. A recovery to pre-crisis GDP level in 2021 lies only in the upper tail of the 95% highest forecast density interval.

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  • Sylvia Kaufmann, 2020. "Covid-19 outbreak and beyond: The information content of registered short-time workers for GDP now- and forecasting," Working Papers 20.03, Swiss National Bank, Study Center Gerzensee.
    • Handle: RePEc:szg:worpap:2003
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    1. Christina D. Romer & David H. Romer, 2004. "A New Measure of Monetary Shocks: Derivation and Implications," American Economic Review, American Economic Association, vol. 94(4), pages 1055-1084, September.
    2. Christina D. Romer & David H. Romer, 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 121-184, National Bureau of Economic Research, Inc.
    3. Beveridge, Stephen & Nelson, Charles R., 1981. "A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the `business cycle'," Journal of Monetary Economics, Elsevier, vol. 7(2), pages 151-174.
    4. Eichenauer Vera & Sturm Jan-Egbert, 2020. "Die wirtschaftspolitischen Maßnahmen der Schweiz zu Beginn der Covid-19-Pandemie," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 21(3), pages 290-300, September.
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    1. Sylvia Kaufmann, 2023. "Covid-19 outbreak and beyond: a retrospect on the information content of short-time workers for GDP now- and forecasting," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 159(1), pages 1-10, December.
    2. Peter Kugler & George Sheldon, 2023. "A monthly leading indicator of Swiss GDP growth based on Okun’s law," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 159(1), pages 1-14, December.
    3. Sylvia Kaufmann, 2022. "Covid-19 outbreak and beyond: A retrospect on the information content of registered short-time workers for GDP now- and forecasting," Working Papers 22.02R, Swiss National Bank, Study Center Gerzensee.
    4. Rong Fu & Luze Xie & Tao Liu & Juan Huang & Binbin Zheng, 2022. "Chinese Economic Growth Projections Based on Mixed Data of Carbon Emissions under the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(24), pages 1-16, December.

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