Place-Based Policies and Nowcasting

There is a growing need to gauge local economic activity in real time. Localised economic challenges have been emphasised in the wake of the COVID-19 pandemic. Real-time trackers (such as OECD trackers) and other nowcasting applications typically correspond to national or highly aggregated regions. In this discussion paper, we briefly explore how unconventional data might be used to produce nowcasts of local economies. We argue that in the absence of traditional nowcasting metrics, efforts to nowcast local economies need a local perspective, with data capture tailored to address heterogeneity across three domains: (1) resources, (2) people and (3) life.     

Nowcasting and monitoring SDG 8

Empirica - We propose a nowcasting approach for indicators assigned to the Sustainable Development Goal (SDG) 8, calling for decent work and economic growth. The nowcasts of SDG indicators are...     

Nowcasting Key Australian Macroeconomic Variables

Forecasts are relied upon as a guide to what future outcomes for the economy might be. However, it is also important to estimate what is happening in the economy now or has taken place in the recent past. This is where ‘nowcasts’ come in. In this article, I describe what nowcasting is, why it can be a useful tool for macroeconomists as well as present daily nowcasts of key Australian macroeconomic variables, including GDP growth, inflation and the unemployment rate.     

Nowcasting sales growth of manufacturing companies in India

The performance of private corporate sector is used as an important demand indicator for monetary policy making. As these data are received with a lag, assessing and monitoring of corporate sales on a real-time basis poses a significant challenge to policy makers in India. In this context, this article attempts to nowcast quarterly sales growth of Indian manufacturing companies and GDP growth of India using dynamic factor modelling framework. A multiple-level framework through turning point analysis and elastic net structure is used to overcome the overfitting problem during variable selection. Empirical results show improvement in forecast accuracy for one quarter ahead nowcast using 3-factor and 4-factor models over the benchmark model. However, absolute dominance of 3-factor models over 4-factor models was not established. As such, the article has proposed a forecast combination technique to nowcast sales growth of manufacturing companies in India.     

Nowcasting causality in mixed frequency vector autoregressive models

This paper introduces nowcasting causality as the mixed-frequency version of instantaneous causality. We analyze the relationship between nowcasting and Granger causality in a mixed-frequency VAR and illustrate its impact on the significance of high-frequency variables in mixed-frequency conditional models.     

Nowcasting National GDP Growth Using Small Business Sales Growth

This study shows that the Xero Small Business Index (XSBI) sales growth data can be used to predict the same period's national nominal GDP growth, with high accuracy, in the United Kingdom, Australia and New Zealand. Findings show that XSBI sales growth can predict the same month's GDP growth around two weeks earlier than the official release in the United Kingdom. On the other hand, the three-month average of the XSBI sales growth can predict the same quarter's GDP growth, six weeks earlier than the official release in New Zealand and five weeks earlier than the official release in Australia.     

Nowcasting Chinese GDP: information content of economic and financial data

This article applies the factor model proposed by Giannone, Reichlin, and Small (2005 Giannone, D., Reichlin, L. and Small, D. 2005. “Nowcasting GDP and inflation: The real time information content of macroeconomic data release”. In Finance and Economic Discussion Series 2005–42, Washington, DC: Board of Governors of the Federal Reserve System.  [Google Scholar]) on a large data set to nowcast (i.e. current-quarter forecast) the annual growth rate of China's quarterly GDP. The data set contains 189 indicator series of several categories, such as prices, industrial production, fixed asset investment, external sector, money market, and financial market. This article also applies Bai and Ng's criteria (2002) to determine the number of common factors in the factor model. The identified model generates out-of-sample nowcasts for China's GDP with smaller mean-squared forecast errors than those of the random walk benchmark. Moreover, using the factor model, we find that interest rate data is the single most important block of information to improve estimates of current-quarter GDP in China. Other important blocks are consumer and retail prices data and fixed asset investment indicators.     

Nowcasting norwegian GDP: the role of asset prices in a small open economy

This article finds that asset prices on Oslo Stock Exchange is the single most important block of data to improve estimates of current quarter GDP in Norway. We use an approximate dynamic factor model that is able to handle new information as it is released, thus the marginal impact on mean square nowcasting error can be studied for a large number of variables. We use a panel of 148 non-synchronous variables. The high informational content in asset prices is explained by reference to the small size of companies on Oslo Stock Exchange and the small and open nature of the Norwegian economy.     

Indonesia After the Asian Crisis*

Indonesia was deeply affected by the 1997–1998 crisis, more so than its East Asian neighbors. Its economic contraction was deeper and more prolonged. It was the only one to experience a (temporary) loss of macroeconomic control. It also suffered “twin crises,” in the sense that its serious economic and financial problems were accompanied by regime collapse. Consequently, recovery was a slow and complex process, as new institutions had to be created, and old ones reformed under successive short‐lived administrations. But this process is largely over. The directly elected president with a strong popular mandate is in power. The new institutional framework for economic policy‐making is in place. Macroeconomic stability has been restored. Although growth has yet to return to pre‐crisis levels, by 2004 per capita income and poverty incidence had recovered to levels prevailing in the mid‐1990s, and in the circumstances economic recovery has arguably proceeded about as quickly as could reasonably have been expected.     

Consumer confidence and consumption expenditure in Indonesia

We estimate several competing regressions and find that confidence predicts consumption expenditure in Indonesia. Our estimations employ data on two measures of confidence, namely consumer and business confidence indexes, consumption and three standard predictors of consumption, namely labour income, stock price, and interest rate. We show that there are economic and statistical gains from consumption growth frameworks that account for consumer and business sentiments. Specifically, we show that policymakers can improve their forecast accuracy by between 4% and 13% by incorporating consumer and business sentiments into their forecasting frameworks.     

Population change and economic development in Indonesia

Standard demographic transition theory holds that transition takes place concurrently with socioeconomic development. Oshima has generalized that the pace of demographic transition in Indonesia has been slow and in keeping with standard theory. This article, however, challenges Oshima's contentions and points out that Indonesia has been able to attain a level of demographic transition with a lower level of economic development than that experienced by present-day developed countries during their transitions from high fertility and mortality to low fertility and mortality. Sections consider the theory of demographic transition, population and economic change in Indonesia, and the likely impact of demographic changes on the future of Indonesia's economy. The more rapid demographic transition experienced in Indonesia may be used to stimulate even faster economic progress in the country.     

Causality between money and prices in Indonesia

The purpose of this study is to examine the relationship between money supply and prices in Indonesia, where money supply is taken to be the stock of narrow money (currency + demand deposits) and prices are proxied by the Jakarta cost of living index. The period studied is 1969–1980. Two concepts of causality namely “proper” causality in which the causal effect takes at least one quarter to manifest itself and “instantaneous” causality in which there are no lags, are employed. The hypothesis of “proper” causality is rejected by bothGranger andSims tests. However, the hypothesis that money and prices are contemporaneously correlated cannot be easily dismissed. Using the framework of [Geweke], contemporaneous causality is treated as a part of linear feedback and the lagged version of Sims test was used. We found that the hypothesis that prices cause money supply cannot be dismissed on the basis of Wald test. However, the contribution of instantaneous causality is very large to the total variance of linear feedback.     

Nowcasting the French index of industrial production: A comparison from bridge and factor models

Governments and central banks need to have an accurate and timely assessment of indicators for the current month, as this is essential for providing a reliable and early analysis of the current economic situation. The index of industrial production (IIP) is probably the most important and widely analyzed monthly indicator, given the relevance of the manufacturing activity as a driver of the whole business cycle. This paper presents a series of models conceived to forecast the current French monthly IIP, based on regression models and dynamic factor models. The combination of these two approaches allows selecting economically relevant explanatory variables among a large data set. In addition, a rolling forecast study is carried out to assess the forecasting performance of the estimated models, using predictive ability and model confidence set tests. This latter allows getting several models displaying equivalent forecasting performance and therefore gives robustness to the forecasting exercise rather than to base the forecasting analysis only on one model.     

Factors affecting profitability of multi-finance company in Indonesia

The aim of this study is to examine the profitabilily of multi-finance companies. This study uses macroeconomic determinants and fundamental variables as factors that affected profitability. The samples of the study was multifinance company in Indonesia over period 2005-2007. The study uses an unbalanced panel data as a methodology. The result suggests that, the ownership of financial assets doesn＇t significantly affect multi-finance performances. This result indicates that multi-finance face difficult situation to generate profit from the credit given. And the result also suggests that all macroeconomic determinants affect multi-finance profitability, with more concern on inflation that have negative significant.     

The effects of Japanese economic performance on Indonesia

This paper assesses how Japanese economic performance affects the Indonesian economy for the 1988 to 2004 period. The empirical evidence provided here suggests that Japanese growth appreciates the local currency in real terms, decreases the inflation and increases growth. As a side issue, we also documented that real exchange rate depreciation accelerates inflation and decreases growth in Indonesia.     

Micro and macroeconomics of tax reform: Indonesia

Indonesia enacted reforms in taxation in 1983. The new laws replace outdated, complicated and unproductive taxes adopted several decades earlier. A complete overhaul of the tax system was required. Use of higher tax rates or other forms of tinkering with the old system were not options under the circumstances. Reform studies began in early 1981. They were strongly focused on base broadening and drastic simplification. While the original impetus for the reform was not fiscal crisis, the new system will be in place in time to supplant much of a projected decline in oil revenues. Other objectives of the reform were more effective income redistribution, simplification of taxation, a new tax information system and streamlining of tax administration. The Indonesian reform made eclectic use of the lessons from similar fiscal exercises in Asia, Africa and Latin America and of recent innovations in tax analysis elsewhere, but was tailored to national objectives and constraints. Prospects for fruitful implementation of the reform are as yet unknowable: one factor augering for some success is that the tax reform was introduced as one of a series of six major belt-tightening policy measures which gained a measure of public acceptance. None were imposed or required for external assistance. It is unclear which, if any, of the lessons derived from this tax reform are transferable elsewhere. However, among the lessons of possible relevance elsewhere is the importance of identifying at the outset those fiscal problems lying at the intersection of the sets of ‘complex’, ‘difficult’ and ‘politically sensitive’ issues. Of the dozens of issues faced in the process of reform in Indonesia, three such issues in this intersection accounted for more than half the intellectual and other resources expended on the reform.     

More Educated Sex Workers Earn More in Indonesia

Although sex work is prevalent, little is known about the relation between education and the price of sex. This study analyzed a dataset of 8,817 Indonesian sex workers (SWs) to conduct an econometric analysis of the relationship between education and the price of sex. When the study controlled for demographic variables, an additional year of schooling was related to a 10 percent increase in the price. About half of this relation was explained by the location of sex, implying that education provided SWs with access to higher-paying clients via locations. The study also analyzed data on comparable non-SWs and found that the relation between education and the price of sex for SWs was the same in size as that of education to hourly earnings for non-SWs. The findings are consistent with the growing body of research that highlights the beneficial effects of education on outcomes beyond the conventional labor market.     

The Determinants of Married Women's Autonomy in Indonesia

Abstract

This paper investigates the determinants of married women's autonomy in Indonesia using the 2000 Indonesian Family Life Survey 3 (IFLS3). It considers the role of kinship norms and the effect of labor force participation on married women's autonomy. The measure of autonomy is based on self-reported answers to an array of questions relating to decision-making authority in the household. They include own-clothing, child-related and personal autonomy, physical mobility, and economic autonomy. The analysis examines if variations in women's autonomy are due to the prevailing kinship norms related to marriage in the community. In keeping with the anthropological literature, the analysis finds that living in patrilocal communities reduces physical autonomy for married women, whereas living in uxorilocal communities improves personal and child-related decision-making autonomy. Estimation results show that labor force participation, higher educational attainment, and increases in household wealth all have positive effects on married women's autonomy in Indonesia.