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Forecasting regional industrial production with novel high‐frequency electricity consumption data

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  • Robert Lehmann
  • Sascha Möhrle

Abstract

In this paper, we study the predictive power of electricity consumption data for regional economic activity. Using unique high‐frequency electricity consumption data from industrial firms for the second‐largest German state, the Free State of Bavaria, we conduct a pseudo out‐of‐sample forecasting experiment for the monthly growth rate of Bavarian industrial production. We find that electricity consumption is the best performing indicator in the nowcasting setup and has higher accuracy than other conventional indicators in a monthly forecasting experiment. Exploiting the high‐frequency nature of the data, we find that the weekly electricity consumption indicator also provides good predictions about industrial activity in the current month with only 2 weeks of information. Overall, our results indicate that regional electricity consumption is a promising avenue for measuring and forecasting regional economic activity.

Suggested Citation

  • Robert Lehmann & Sascha Möhrle, 2024. "Forecasting regional industrial production with novel high‐frequency electricity consumption data," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 43(6), pages 1918-1935, September.
    • Handle: RePEc:wly:jforec:v:43:y:2024:i:6:p:1918-1935
    DOI: 10.1002/for.3116
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    Cited by:

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    2. Grega Ferenc, 2023. "Darstellung der Indikatoren zur Beobachtung des Arbeitsmarktes in Sachsen," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 30(01), pages 28-30, February.

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    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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