Predicting the German Economy: Headline Survey Indices Under Test

Robert Lehmann and Magnus Reif

Journal of Business Cycle Research, 2021, vol. 17, issue 2, No 5, 215-232

Abstract: Abstract This analysis investigates the predictive power of the headline indices of the four most important German survey providers. We conduct an out-of-sample, real-time forecast experiment for growth of total and private sector gross domestic product and growth of gross value added in both the manufacturing and the service sector. All providers publish valuable leading indicators for both GDP measures, with some advantages for the ifo indicators and the Economic Sentiment Indicator, respectively. For the manufacturing sector, indicators provided by the ifo Institute are clearly superior. For the service sector, all indicators prove to have a similar nowcasting performance, whereas the Economic Sentiment Services of the Centre for European Research is preferable for one quarter-ahead predictions.

Keywords: Forecasting; ifo business climate; PMI; ESI; ZEW economic sentiment (search for similar items in EconPapers)
JEL-codes: E17 E27 E37 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Working Paper: Tracking and Predicting the German Economy: ifo vs. PMI (2020)
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DOI: 10.1007/s41549-021-00055-5

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