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Balance of opinion What about missing the weights?

Author

Listed:
  • O. BIAU

    (Insee)

  • N. FERRARI

    (Insee)

Abstract

Due to their early release, Business Tendency Surveys (BTS) are widely used in short term forecasting. Their questions are mainly qualitative; answers are most often used to calculate balances of opinions, which are defined as the difference between the proportions of positive answers with respect to the negative ones. These indicators are then used by forecasters as explanatory variables in econometric models. The balances of opinions are generally weighted with the firm size. However, there is no theoretical evidence of the efficiency of this kind of weighting. We propose here a model which aims at determining optimum weights; these weights should allow us to optimize the forecast of the macroeconomic variable. According to our analysis, the weights have to grow less than proportionally with the firm size. This conclusion is empirically tested through several examples derived from the French Industry BTS.

Suggested Citation

  • O. Biau & N. Ferrari, 2006. "Balance of opinion What about missing the weights?," Documents de Travail de l'Insee - INSEE Working Papers g2006-12, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2006-12
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zqx10/f1.pdf
    File Function: Document de travail de la DESE numéro G2006-12
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    More about this item

    Keywords

    Business Tendency Surveys; quantification; balance of opinion; short-term forecasting;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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