From a System of National Accounts to a Process of National Wellbeing Accounting

There are repeated calls to go ‘Beyond GDP’, for measures of wellbeing and progress in addition to those that the System of National Accounts (SNA) is designed to provide. We identify key issues that can help build on the rigour of SNA whilst fitting the measurement of economic performance within a broader assessment of national wellbeing and progress. Such drivers are already leading to a proliferation of indicators and accounts, for example in the development of non‐monetary measures of natural resources, but there are significant measurement challenges, not least the question of whether a single, overall measure or index of wellbeing is valid. But the challenge of measurement, per se, is one thing: in our view, a more critical issue is whether the measures will actually be used. We propose a dynamic and multi‐staged approach for developing SNA, embracing the production and use of measures. This would start by identifying user requirements for wider measures, to provide the basis for national and cross‐national developments in well‐being accounting. We envisage greater branding and marketing of national well‐being concepts to promote measures and support their use. We call for outreach by producers, so that there is dialogue about the development and use of measures.     

An assessment of human development,by region and country

The United Nations Development Program has introduced a composite index—the Human Development Index (HDI)—as a measure to replace GDP for assessing development of countries, using life expectancy, adult literacy, and adjusted per capita GDP as indicators. In this paper the authors suggest an alternative method for computing the index utilizing the same criteria.     

A new coincident index of business cycles based on monthly and quarterly series

Popular monthly coincident indices of business cycles, e.g. the composite index and the Stock–Watson coincident index, have two shortcomings. First, they ignore information contained in quarterly indicators such as real GDP. Second, they lack economic interpretation; hence the heights of peaks and the depths of troughs depend on the choice of an index. This paper extends the Stock–Watson coincident index by applying maximum likelihood factor analysis to a mixed‐frequency series of quarterly real GDP and monthly coincident business cycle indicators. The resulting index is related to latent monthly real GDP. Copyright © 2002 John Wiley & Sons, Ltd.     

Forecasting the UK economy with a medium-scale Bayesian VAR

We estimate a Bayesian VAR (BVAR) for the UK economy and assess its performance in forecasting GDP growth and CPI inflation in real time relative to forecasts from COMPASS, the Bank of England’s DSGE model, and other benchmarks. We find that the BVAR outperformed COMPASS when forecasting both GDP and its expenditure components. In contrast, their performances when forecasting CPI were similar. We also find that the BVAR density forecasts outperformed those of COMPASS, despite under-predicting inflation at most forecast horizons. Both models over-predicted GDP growth at all forecast horizons, but the issue was less pronounced in the BVAR. The BVAR’s point and density forecast performances are also comparable to those of a Bank of England in-house statistical suite for both GDP and CPI inflation, as well as to the official Inflation Report projections. Our results are broadly consistent with the findings of similar studies for other advanced economies.     

Content horizons for univariate time-series forecasts

This paper investigates the maximum horizon at which conditioning information can be shown to have value for univariate time series forecasts. In particular, we consider the problem of determining the horizon beyond which forecasts from univariate time series models of stationary processes add nothing to the forecast implicit in the unconditional mean. We refer to this as the content horizon for forecasts, and provide a formal definition of the corresponding forecast content function at horizons s=1,… S. This function depends upon parameter estimation uncertainty as well as on autocorrelation structure of the process. We show that for autoregressive processes it is possible to give an asymptotic expression for the forecast content function, and show by simulation that the expression gives a good approximation even at modest sample sizes. The results are applied to the growth rate of GDP and to inflation, using US and Canadian data.     

Weekly economic activity: Measurement and informational content

We construct a composite index to measure the real activity of the Swiss economy on a weekly frequency. The index is based on a novel high-frequency data set capturing economic activity across distinct dimensions over a long time horizon. We propose a six-step procedure for extracting precise business cycle signals from the raw data. By means of a real-time evaluation, we highlight the importance of our proposed adjustment procedure: (i) our weekly index significantly outperforms a comparable index without adjusted input variables; and (ii) the weekly index outperforms established monthly indicators in nowcasting GDP growth. These insights should help improve other recently developed high-frequency indicators.     

An application of six sigma methodology to enhance leisure service quality

Thanks to flourishing development of the service industry for the past few years, its GDP output value is over 73%, which accounts for 58% of the employment population. The leisure service industry, in particular grows by multiple revealing its significant importance. As there is a feature of high homogeneity and substitution in the same trade, the core issue lies on enhancement of service quality in an environment of keen competition. As a result, six sigma (6σ) is applied in this research to improve service quality and increase competitiveness of the leisure industry. First, the service quality model proposed by Parasuraman, A., V. A. Zeithaml, and L. L. Berry (PZB model for short) is utilized to design the items in the service quality questionnaire. Importance and satisfaction of each service item perceived by customers are based for the scale, whose means are further converted to indexes. Thus, a scale-based service performance evaluation matrix with indices of importance as the Y-axis and those of satisfaction as the X-axis is defined. Then, service factors of high importance and low satisfaction are located and defined for improvement in accordance with the index location of each service factor. A measurement model based on the difference between customers’ importance and satisfaction is proposed and a measurement index is defined for an objective evaluation method and procedures. Next, factors of customer dissatisfaction are analyzed and improvement methods are devised. Finally, leisure service quality is monitored by the performance control model.     

How far can changes in general business activity be forecasted?

An F test [Nelson (1976)] of Parzen's prediction variance horizon [Parzen (1982)] of an ARMA model yields the number of steps ahead that forecasts contain information (short memory). A special 10 year pattern in Finnish GDP is introduced as a ‘seasonal’ in an ARMA-model. Forecasts three years ahead are statistically informative but exploiting the complete 10 year pattern raises doubts both about model memory and model validity.     

Entrepreneurial index for low-income households in Malaysia

Even though development organizations provide access to working capital and enterprise development training, they often fail to improve the socio-economic condition of low-income households. One of the factors contributing to the failure of development programs is their lack of capacity to measure the entrepreneurial potentials among the low-income participants. This study focused on the development of an entrepreneurial index that measures the entrepreneurial potentials among low-income households. Adopting a cross-sectional design, a total of 403 micro-entrepreneurs were approached from the list provided by ‘Majlis Amanah Rakyat’ and ‘Majlis Agama Islam Dan Adat Istiadat’, Kelantan. This study used formative hierarchial model to determine the local and global weights for all the items used to develop the index. Further, the nomological validity revealed a positive effect of entrepreneurial index on entrepreneurial competency, enterprise performance, and enterprise sustainability.     

A Coincident Index,Common Factors,and Monthly Real GDP*

The Stock–Watson coincident index and its subsequent extensions assume a static linear one‐factor model for the component indicators. This restrictive assumption is unnecessary if one defines a coincident index as an estimate of monthly real gross domestic products (GDP). This paper estimates Gaussian vector autoregression (VAR) and factor models for latent monthly real GDP and other coincident indicators using the observable mixed‐frequency series. For maximum likelihood estimation of a VAR model, the expectation‐maximization (EM) algorithm helps in finding a good starting value for a quasi‐Newton method. The smoothed estimate of latent monthly real GDP is a natural extension of the Stock–Watson coincident index.     

Measuring workplace internationalization: incorporating self-reported measures of international engagement

This paper constructs a multi-criterion index to assess the degree of workplace internationalization in Canadian workplaces in a major nationally representative dataset – the Workplace and Employee Survey. The measure, referred to as the degree of workplace internationalization (DWI) index, is designed to capture an inclusive representation of internationalization consistent with globalization. It is made up of two parts: an observed measurement component and a self-reported component. The observed measurement component is the sum of two ratios: ‘foreign sales to total sales’ and ‘foreign ownership to total ownership’. The self-reported component is the summed result of two scale measurements: ‘importance of international competition’ and ‘importance of expanding into new geographic markets’. The value-added of the DWI index is the self-reported component, which integrates the consequences (importance of international competition) and opportunities (importance of expanding into new geographic markets) of globalization. The index is developed and verified in three stages. The first describes an effort to ensure measurement validity. The second stage examines the index's measurement reliability by subjecting the DWI index to statistical tests common to psychometric theory of index building. In the third stage, the index is decomposed into an observed measurement component and a self-reported component. In separate tests, these components, along with the DWI index as a whole, are regressed against two sets of measures with known relationships with internationalization: the propensity to innovate, and the use of conceptual training programmes. The main result is that the index as a whole serves as the better proxy of workplace internationalization. Finally, it is argued to be an improvement on existing measures of internationalization.     

中国人均GDP时间序列建模与相关分析

人均GDP是衡量一个国家和地区经济发展水平和综合经济实力的重要指标。本文在相关背景下收集了1978-2008年中国人均GDP时间序列数据,应用了SPSS软件进行数据分析并建立时间序列模型,利用模型预测了2009,2010年人均GDP数值,对制定相应的宏观调控政策有十分重要的意义。     

High-frequency monitoring of growth at risk

Monitoring changes in financial conditions provides valuable information on the contribution of financial risks to future economic growth. For that purpose, central banks need real-time indicators to promptly adjust their policy stance. In this paper, we extend the quarterly growth-at-risk (GaR) approach of Adrian et al. (2019) by accounting for the high-frequency nature of financial conditions indicators. Specifically, we use Bayesian mixed-data sampling (MIDAS) quantile regressions to exploit the information content of both a financial stress index and a financial conditions index, leading to real-time high-frequency GaR measures for the euro area. We show that our daily GaR indicator (i) displays good GDP nowcasting properties, (ii) can provide an early signal of GDP downturns, and (iii) allows day-to-day assessment of the effects of monetary policies. During the first six months of the Covid-19 pandemic period, it has provided a timely measure of the tail risks to euro-area GDP.     

A pragmatic approach to evaluate alternative indicators to GDP

The serious economic crisis broken out in 2008 highly stressed the limitations of GDP used as a well-being indicator and as a predictive tool for economy. This induced the need to identify new indicators able to link the economic prosperity of a country to aspects of sustainable development and externalities, both positive and negative, in the long run. The aim of this paper is to introduce a structured approach which supports the choice or the construction of alternative indicators to GDP. The starting point is the definition of what a well-being indicator actually should represent according to the Recommendations of the Stiglitz-Sen-Fitoussi Report on the measurement of economic performance and social progress. Then the paper introduces a systematic procedure for the analysis of well-being indicators. The different phases of this procedure entail the checking of indicators technical properties and their effect on the representational efficacy. Finally, some of the most representative well-being indicators drawn from the literature are compared and a detailed application example is proposed.     

Nowcasting China’s GDP Using a Bayesian Approach

Real time nowcasting is an assessment of current-quarter GDP from timely released economic and financial series before the GDP figure is disseminated. Providing a reliable current quarter nowcast in real time based on the most recently released economic and financial monthly data is crucial for central banks to make policy decisions and longer-term forecasting exercises. In this study, we use dynamic factor models to bridge monthly information with quarterly GDP and achieve reduction in the dimensionality of the monthly data. We develop a Bayesian approach to provide a way to deal with the unbalanced features of the dataset and to estimate latent common factors. We demonstrate the validity of our approach through simulation studies, and explore the applicability of our approach through an empirical study in nowcasting the China’s GDP using 117 monthly data series of several categories in the Chinese market. The simulation studies and empirical study indicate that our Bayesian approach may be a viable option for nowcasting the China’s GDP.     

Constructing a generalized model of the human development index

The human development index (HDI) has been a well-known yardstick of the United Nations Development Programme (UNDP) to measure human development (HD) from a multi-dimensional perspective, since its introduction in the first Human Development Report (HDR) in 1990. Although there have been several modifications in the computation of this index, we suggest a new perspective in a multi-criteria decision-making framework in this paper. The new methodology addresses some of the limitations of the existing approach without violating the guidelines of the UNDP. As a first step, we revisit the concept of the HDI and then integrate the average shortfall factor with the HDI for the construction of GHDI--a generalized model of the HDI. Then we propose GHDI^R--a relative measure of the GHDI relative to a benchmark HD. This index is year-specific, and we determine it based on the goals of the human development indicators as fixed by the UNDP as well as the individual performance of all the countries under consideration for the year concerned. For this purpose, we employ a multi-criteria decision-making model using a two-step methodology. Initially, we develop a multi-objective model to create the benchmark HD. Next, we assess the GHDI^R with a multi-index ranking model. We implement these procedures for the countries based on their empirical data on human development indicators as presented in the HDR (2014) and compare the HDI with the GHDI and GHDI^R.     

Typology formation across socio-economic indicators

Some decisions in planning and policy formation require the comparison of one region or country with another. If the entities being compared are known and have been demonstrated to be either similar or different, then valid comparisons can be made. Unfortunately, many comparisons are made on an ad hoc and often improper basis. The paper describes a method of typology formation which requires the modification and the use of the Euclidean distance measure calculated between countries over a series of social indicators. The potential usefulness of the method is demonstrated by reference to an example using indicators of educational system provision.     

Causality in temporal systems: Characterization and a survey

A time series {Y_t} ‘causes’ another time series {Y_t}, in the sense defined by C.W.J. Granger, if present Y can be predicted better by using past values of X than by not doing so, other relevant information (including the past of Y) being used in either case. In this paper we (1) classify the possible causality relationships between two series X and Y, using an analogy to events in a sample space; (2) review existing work and present some new results on alternative characterizations of the more important causality events; and (3) compare several recent procedures for the empirical detection of causality.     

How to develop a customer satisfaction scale with optimal construct validity

In this article, we investigate how to construct a customer satisfaction (CS) scale which yields optimally valid measurements of the construct of interest. For this purpose we compare three alternative methodologies for scale development and construct validation. Furthermore, we discuss a satisfaction measurement application which is consistent with Messick’s (in: Linn (ed.) Educational measurement, 1989) construct validity theory. Following the deductive design for test development and construct validation, a multi-item measure for CS with a retail bank was developed. The measure was applied in survey research ( \(N\)  = 1,689) within a Dutch retail bank. The items constituted a unidimensional scale, allowing the computation of scale scores. The tests of 11 hypotheses about scale-score characteristics demonstrated that the scale score represented the construct of CS well. Furthermore, the one-factor theory (e.g. Yi, in: Zeithaml (ed.) Review of marketing, 1990) of satisfaction/dissatisfaction was confirmed. An implication of this result is that satisfaction/dissatisfaction can be measured on one scale instead of two scales, one for satisfaction and one for dissatisfaction. The results demonstrate that the deductive design is an appropriate methodology for measure development and construct validation in applied psychological research. The article concludes that the multi-item measure is well-suited for CS measurement in retail banking and that customized satisfaction scales have advantages but also disadvantages compared to standardized scales.     

Entrepreneurs’ achieved success: developing a multi-faceted measure

Firm performance is typically measured via objective financial indicators. However, researchers increasingly acknowledge that entrepreneurs do not measure their success solely in financial terms but that a range of often subjective indicators matter to them. This article contributes to the debate on entrepreneurial performance by studying how entrepreneurs assess their achieved success. ‘Entrepreneurs’ achieved success’ was conceptualized as a multi-faceted construct that includes entrepreneurs’ self-reported achievement of firm performance, workplace relationships, personal fulfilment, community impact, and personal financial rewards. It was measured via the Subjective Entrepreneurial Success–Achievement Scale (SES-AS). Over the course of three studies (N?=?390) the factorial structure of ‘entrepreneurs’ achieved success’ was established and largely replicated in two cultures. Based on a nomological network, we documented relationships among ‘entrepreneurs’ achieved success’, quasi-objective indicators of firm performance, and entrepreneurs’ financial satisfaction, creativity, and health. Based on our research, we propose a new conceptual framework to study performance in the context of entrepreneurship. This framework acknowledges both the success criteria that entrepreneurs wish to achieve and those that they actually achieve, and extends our understanding of firm performance.