Nowcasting GDP: Electronic Payments, Data Vintages and the Timing of Data Releases

39 Pages Posted: 19 Oct 2013

See all articles by John W. Galbraith

John W. Galbraith

McGill University - Department of Economics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Greg Tkacz

Saint Francis Xavier University - Economics

Date Written: August 18, 2013

Abstract

We describe and assess the usefulness of a newly-constructed database of electronic payments, comprised of debit and credit card transactions as well cheques that clear through the banking system, as indicators of current GDP growth. Apart from capturing a broad range of spending activity, these variables are available on a very timely basis, thereby making them suitable candidate indicators. Controlling both for the release dates of various variables and the vintage of GDP available to analysts at the time a nowcast is produced, we generate nowcasts of GDP growth for a given quarter over a span of five months, which is the period over which interest in nowcasts would exist. We find that nowcast errors fall by about 60 percent between the first and final nowcast. Evidence on the value of the additional payments variables is mixed, however; the point estimates suggest reductions in forecast loss at some nowcast horizons, but with considerable variability.

Keywords: GDP, nowcasting, electronic payments

JEL Classification: E32, E37, C53

Suggested Citation

Galbraith, John W. and Tkacz, Greg, Nowcasting GDP: Electronic Payments, Data Vintages and the Timing of Data Releases (August 18, 2013). CIRANO - Scientific Publications 2013s-25. Available at SSRN: https://ssrn.com/abstract=2342228 or http://dx.doi.org/10.2139/ssrn.2342228

John W. Galbraith

McGill University - Department of Economics ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Greg Tkacz (Contact Author)

Saint Francis Xavier University - Economics ( email )

Nicholson Hall, Room 505
P.O. Box 5000
Nova Scotia
Canada

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