National Institute Economic Review current issue

AT A GLANCE . . . The world economy

Wed, 21 Oct 2009 01:04:53 PDT

AT A GLANCE . . . The UK economy

Wed, 21 Oct 2009 01:04:54 PDT

COMMENTARY: THE BURDEN OF THE NATIONAL DEBT

Weale, M. — Wed, 21 Oct 2009 01:04:55 PDT

THE WORLD ECONOMY: Consumer spending and the financial crisis

Wed, 21 Oct 2009 01:04:58 PDT

THE WORLD ECONOMY: Effects of risk premia falling below sustainable levels in the US

Wed, 21 Oct 2009 01:04:53 PDT

THE WORLD ECONOMY: Asian fiscal stimulus supporting the global recovery

Wed, 21 Oct 2009 01:04:54 PDT

THE WORLD ECONOMY: Prospects for fiscal consolidation in Europe

Wed, 21 Oct 2009 01:04:54 PDT

LONG-TERM SCARRING FROM THE FINANCIAL CRISIS

Barrell, R. — Wed, 21 Oct 2009 01:04:55 PDT

PROSPECTS FOR THE UK ECONOMY

Kirby, S., Barrell, R., Foley-Fisher, N. — Wed, 21 Oct 2009 01:04:55 PDT

BUDGET CONSOLIDATION OPTIONS FOR THE UK

Barrell, R. — Wed, 21 Oct 2009 01:04:55 PDT

CONFIDENCE AND LEADING INDICATORS: INTRODUCTION

Mitchell, J. — Mon, 19 Oct 2009 19:05:59 PDT

Erratum

Wed, 21 Oct 2009 01:04:58 PDT

A SYSTEM OF RAPID ESTIMATES TO IMPROVE REAL-TIME MONITORING OF THE ECONOMIC SITUATION: THE CASE OF THE EURO AREA

Mazzi, G. L., Montana, G. — Mon, 19 Oct 2009 19:05:59 PDT

Timely availability of relevant economic information is from the users' point of view a crucial pre-requirement for effective economic and monetary policy and for accurate analysis and reliable forecasting. Unfortunately, official statistics are not always able to meet such needs. For this reason, particularly over the recent past, advanced statistical and econometric techniques have been used to complement the classical production process in order to increase the timeliness of the relevant economic information. Furthermore, official statistics do not necessarily show explicitly relevant phenomena such as the cyclical situation and the location of turning points. In order to fill this gap, indicators have to be built up to extract such relevant signals and to make them available in an easily readable and comprehensible way to all users. This paper gives a general overview of ongoing Eurostat projects, aiming to supply timely information to all users based on transparent and statistically sound methodologies. In particular this paper presents results related to the construction of flash estimates in order to increase the timeliness of official statistics as well as the construction of a timely statistical system for business cycle analysis based on a set of turning points indicators and cyclical estimates. The results obtained so far are very encouraging, especially in terms of the overall quality of the estimates and the statistical robustness of the proposed methods. Nevertheless, some improvements, particularly related to the precision of flash estimates, are needed, especially under an uncertain economic situation and regime changes.

NOWCASTING IS NOT JUST CONTEMPORANEOUS FORECASTING

Castle, J. L., Fawcett, N. W.P., Hendry, D. F. — Mon, 19 Oct 2009 19:05:59 PDT

We consider the reasons for nowcasting, the timing of information and sources thereof, especially contemporaneous data, which introduce different aspects compared to forecasting. We allow for the impact of location shifts inducing nowcast failure and nowcasting during breaks, probably with measurement errors. We also apply a variant of the nowcasting strategy proposed in Castle and Hendry (2009) to nowcast Euro Area GDP growth. Models of disaggregate monthly indicators are built by automatic methods, forecasting all variables that are released with a publication lag each period, then testing for shifts in available measures including survey data, switching to robust forecasts of missing series when breaks are detected.

NOWCASTING EURO AREA ECONOMIC ACTIVITY IN REAL TIME: THE ROLE OF CONFIDENCE INDICATORS

Giannone, D., Reichlin, L., Simonelli, S. — Mon, 19 Oct 2009 19:05:59 PDT

This paper assesses the role of qualitative surveys for the early estimation of GDP in the Euro Area in a model-based automated procedure which exploits the timeliness of their release. The analysis is conducted using both an historical evaluation and a real-time case study on the current conjuncture.

USING REAL-TIME OUTPUT GAPS TO EXAMINE PAST AND FUTURE POLICY CHOICES

Adam, C., Cobham, D. — Mon, 19 Oct 2009 19:05:59 PDT

Alternative measures of the UK output gap are considered for 1984-2007. The real-time series is strongly affected by the rolling-time estimation of the trend, and produces a picture of the business cycle which is not consistent with contemporary perceptions of the large fluctuations of the late 1980s and early 1990s. A new, 'nearly-real', measure developed here may be better for estimating historical reaction functions. In the context of the current recession, none of these mechanically derived measures of the output gap are useful. Policymakers should make careful estimates of the likely fall in potential output on the basis of other information.

ARCHITECTS AS NOWCASTERS OF HOUSING CONSTRUCTION

Holmes, M. J., Mitchell, J., Silverstone, B. — Mon, 19 Oct 2009 19:05:59 PDT

For more than four decades, the New Zealand Institute of Economic Research (NZIER) has conducted a two-question, quarterly survey of architect forecasts of public and private sector construction expenditure. This qualitative survey is published one week after the end of each quarter and nine weeks ahead of the official quantitative data thereby giving architect opinion nowcasting status. This paper covers selected aspects of this unexplored series with particular reference to residential housing construction and the value-added information from architects as nowcasters. Specifically, we consider several qualitative-to-quantitative conversion methods, in-sample and out-of-sample performance, cyclical features and respondent dynamics. Although our work relates to architects - a sub-sector of the service industry - our results have a wider application to business survey questions using ordered qualitative responses.