Weather, the Forgotten Factor in Business Cycle Analyses

Roland Döhrn and Philipp an de Meulen

No 539, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: In periods of unusual weather, forecasters face a problem of interpreting economic data: Which part goes back to the underlying economic trend and which part arises from a special weather effect? In this paper, we discuss ways to disentangle weather-related from business cycle-related influences on economic indicators. We find a significant influence of weather variables at least on a number of monthly indicators. Controlling for weather effects within these indicators should thus create opportunities to increase the accuracy of indicator-based forecasts. Focusing on quarterly GDP growth in Germany, we find that the accuracy of the RWI short term forecasting model improves but advances are small and not significant.

Keywords: weather; short term forecasting; bridge equations; forecast accuracy (search for similar items in EconPapers)
JEL-codes: C53 E37 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-for and nep-mac
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:539

DOI: 10.4419/86788617

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