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Weather adjustment of economic output

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  • Schreiber, Sven

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 propose a way of measuring aggregate abnormal weather conditions based on available local measurements and a straightforward regression-based framework to analyze their impact on German monthly total industrial and construction-sector production data, and find noticeable effects. In the historical - and seasonally adjusted - construction sector growth data the extra explanatory power of the weather regressors over a benchmark univariate autoregressive model even exceeds 50% of the variation. The estimated effects of weather deviations can be subtracted from the already seasonally adjusted data to obtain (seasonally as well as) weather adjusted series, which might capture economic developments better. The estimated adjustments are quantitatively relevant also for aggregate output (GDP).

Suggested Citation

  • Schreiber, Sven, 2017. "Weather adjustment of economic output," Discussion Papers 2017/5, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:20175
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    References listed on IDEAS

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    1. 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.
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    More about this item

    Keywords

    weather; business cycle; nowcasting;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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