Everything about Economic Data totally explained
Economic data are usually numerical
time-series,
for example, sets of data (covering periods of time) for part or all of a single
economy or the international economy. When they're time-series the data sets are usually monthly but can be quarterly and annual. The data may be adjusted in various ways (for ease of further analysis), most commonly adjusted or unadjusted for seasonal fluctuations.
Economic data may also describe functions or inter-relationships between
variables [wherethe inter-relationships may be theoretical (for example a production function) rather than factual], and they may describe a static as opposed to a dynamic relationship (
for example, an
input-output matrix or a
foreign exchange correlation matrix as opposed to,
for example. a series showing changes of automobile output over time).
Thousands of data sets are available. These cover,
for example, the major components of
Gross National Product,
Gross National Expenditure,
Gross National Income, and a whole panoply of series including
output, orders,
trade,
confidence,
prices and financial series (
for example, money and
interest rates). At the international level there are many series including
international trade, international financial flows, direct investment flows (between countries) and
exchange rates.
Within a country the data series are usually produced by one or more statistical organisations,
for example, a
government or quasi-government organisation and/or the
central bank. International statistics are produced by several international bodies and firms, including the
International Monetary Fund and the
Bank for International Settlements.
Many methods can be used to analyse the data. These include,
for example, time-series analysis using
multiple regression,
Box-Jenkins analysis,
seasonality analysis. Analysis may be
univariate (forecasting from one series) or
multivariate (forecasting from several series).
Economists,
econometricians and
financial experts build what can be very complex
models that incorporate raw economic data, adjusted economic data, and relationships that they've estimated, to model economic developments. These models may be partial, aimed at examining particular parts of an economy or economies, or they may cover a whole economic system and forecast,
for example, demand,
prices and
employment.
Economic Data Issues
Good economic data is a precondition to effective macroeconomic management. With the complexity of modern economies and the lags inherent in macroeconomic policy instruments, a country must have the capacity to promptly identify any adverse trends in its economy and to apply the appropriate corrective measure. This can't be done without economic data that's complete, accurate and timely.
Increasingly, the availability of good economic data is coming to be seen by international markets as an indicator of a country that's a promising destination for
foreign investment. International investors are aware that good economic data is necessary for a country to effectively manage its affairs and, other things being equal, will tend to avoid countries that don't publish such data.
The public availability of reliable and up-to-date economic data also reassures international investors by allowing them to monitor economic developments and to manage their
investment risk. The severity of the Mexican and Asian financial crisis was made worse by the realization by investors that the authorities had hidden a deteriorating economic situation by slow and incomplete reporting of critical economic data. Being unsure of exactly how bad the economic situation was, they tried to withdraw their assets quickly and in the process caused further damage to the economies in question. It was the realization that data issues lay behind much of the damage done by these international
financial crises that led to the creation of international data quality standards, such as the
IMF’s
General Data Dissemination System (GDDS).
Inside a country, the public availability of good quality economic data allows firms and individuals to make their business decisions with confidence that they understand the overall macroeconomic environment. As with international investors, local business people are less likely to over-react to a piece of bad news if they understand the economic context.
Further Information
Get more info on 'Economic Data'.
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