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The value of hard and soft data for short-term forecasting of GDP

Author

Listed:
  • Keeney, Mary

    (Central Bank of Ireland)

  • Kennedy, Bernard

    (Central Bank of Ireland)

  • Liebermann, Joelle

    (Central Bank of Ireland)

Abstract

When monitoring and assessing the state of the economy in real time, policymakers face the problem that Gross Domestic Product (GDP) is released with a lag. For the euro area, the first estimate of GDP for a reference quarter is only released six weeks after the close of the quarter. In the interim period, one can use monthly conjunctural indicators to obtain a more timely estimate of GDP. These indicators include hard data, such as industrial production, and soft data such as PMI surveys. However, the hard data for a reference month are only released with a one or two month lag, whereas the soft data are released at the end of the reference month. Hence, one faces a potential trade-off between reliability and timeliness of information. This letter illustrates the value of soft and hard data for computing an early GDP estimate by running a pseudo real-time forecasting exercise.

Suggested Citation

  • Keeney, Mary & Kennedy, Bernard & Liebermann, Joelle, 2012. "The value of hard and soft data for short-term forecasting of GDP," Economic Letters 11/EL/12, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:11/el/12
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    References listed on IDEAS

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    Cited by:

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    3. Radoslaw Sobko & Maria Klonowska-Matynia, 2021. "The Relationship between the Purchasing Managers’ Index (PMI) and Economic Growth: The Case for Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 198-219.
    4. Мекенбаева Камила // Mekenbayeva Kamila & Karel Musil, 2017. "Система прогнозирования в Национальном Банке Казахстана: наукаст на основа опросов // Forecasting system at the National Bank of Kazakhstan: survey-based nowcasting," Working Papers #2017-1, National Bank of Kazakhstan.
    5. Camila Figueroa S. & Michael Pedersen, 2019. "Extracting information on economic activity from business and consumer surveys in an emerging economy (Chile)," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 22(3), pages 098-131, December.
    6. Conefrey, Thomas & Walsh, Graeme, 2018. "A Monthly Indicator of Economic Activity for Ireland," Economic Letters 14/EL/18, Central Bank of Ireland.
    7. Emilian DOBRESCU, 2020. "Self-fulfillment degree of economic expectations within an integrated space: The European Union case study," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 5-32, December.

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