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Adjusting production indices for varying weather effects

Author

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  • Erik Haustein
  • Sven Schreiber

Abstract

While recurring and regular variations of weather conditions are implicitly addressed by standard seasonal adjustment procedures of economic time series, extraordinary weather outcomes are not. We analyze their impact on German total industrial and construction-sector production and find modest but significant effects. The estimated effects of weather deviations can be subtracted from the already seasonally adjusted data to obtain seasonally as well as weather adjusted series. Given the timely availability of the weather data compared to the publication lag of economic measurements, we also show how to exploit this contemporaneous impact in real time to help the nowcasting of industrial production.

Suggested Citation

  • Erik Haustein & Sven Schreiber, 2016. "Adjusting production indices for varying weather effects," IMK Working Paper 171-2016, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    • Handle: RePEc:imk:wpaper:171-2016
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    File URL: http://www.boeckler.de/pdf/p_imk_wp_171_2016.pdf
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    References listed on IDEAS

    as
    1. Schreiber, Sven & Soldatenkova, Natalia, 2016. "Anticipating business-cycle turning points in real time using density forecasts from a VAR," Journal of Macroeconomics, Elsevier, vol. 47(PB), pages 166-187.
    2. Proaño, Christian R. & Theobald, Thomas, 2014. "Predicting recessions with a composite real-time dynamic probit model," International Journal of Forecasting, Elsevier, vol. 30(4), pages 898-917.
    3. repec:zbw:rwirep:0539 is not listed on IDEAS
    4. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    5. Döhrn, Roland & an de Meulen, Philipp, 2015. "Weather, the Forgotten Factor in Business Cycle Analyses," Ruhr Economic Papers 539, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Michael D. Boldin & Jonathan H. Wright, 2015. "Weather-adjusting employment data," Working Papers 15-5, Federal Reserve Bank of Philadelphia.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Schreiber, Sven, 2017. "Weather adjustment of economic output," Discussion Papers 2017/5, Free University Berlin, School of Business & Economics.
    2. Schreiber, Sven, 2018. "Weather-induced Short-term Fluctuations of Economic Output," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181622, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    weather; business cycle; nowcasting;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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