How can we separate the signal from the noise? A systematic interpretation of the GDP indicator
News, Economic Commentaries Statistics Sweden’s GDP indicator is an important, if imprecise, source of information for assessing developments in the real economy. As it can contain considerable noise, it should not be interpreted mechanically. In an Economic Commentary, Viking Waldén describes a more accurate way of interpreting the GDP indicator in real time.
The indicator provides monthly information on GDP growth ahead of the publication of the quarterly National Accounts (NA). As it is based on preliminary data, it may differ from the NA statistics. In practice, it therefore contains both signals and noise.
“My analysis shows that combining the GDP indicator with existing forecasts allows the new information to be used more systematically to improve growth forecasts.”
The analysis in the Economic Commentary illustrates a general challenge in assessing economic activity: how to weigh incoming statistics against earlier information when both are uncertain.
Read more in the Economic Commentary “A systematic model for the GDP indicator”.