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Short-term forecasting with business surveys: Evidence for German IHK data at federal state level

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  • Wenzel, Lars
  • Wolf, André

Abstract

We investigate the performance of the IHK business climate indices as forecasting tools within a growth framework at the level of four federal states in Northern Germany. In doing this, we match quarterly index scores with estimates of quarterly production data, generated through a Chow-Lin procedure. Estimating the model reveals strong linkages of the index scores to short-term output growth at the regional level, even after controlling for prior information on the position in the business cycle as well as for nation-wide fluctuations. Examining the forecasting accuracy of our model by means of out-of-sample predictions confirms these results: the model clearly outperforms an autoregressive benchmark. This can to a large part be traced back to information conveyed by the IHK index.

Suggested Citation

  • Wenzel, Lars & Wolf, André, 2013. "Short-term forecasting with business surveys: Evidence for German IHK data at federal state level," HWWI Research Papers 140, Hamburg Institute of International Economics (HWWI).
  • Handle: RePEc:zbw:hwwirp:140
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    Cited by:

    1. Robert Lehmann & Klaus Wohlrabe, 2014. "Regional economic forecasting: state-of-the-art methodology and future challenges," Economics and Business Letters, Oviedo University Press, vol. 3(4), pages 218-231.

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