Measuring Current strongEconomic Fluctuationsstrong.pdfVIP

This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Annals of Economic and Social Measurement, Volume 2, number 1 Volume Author/Editor: NBER Volume Publisher: NBER Volume URL: /books/aesm73-1 Publication Date: 1973 Chapter Title: Measuring Current Economic Fluctuations Chapter Author: Julius Shiskin Chapter URL: /chapters/c9835 Chapter pages in book: (p. 1 - 15) Anna/s of Eco,;oniic and Social Measuremsot. 2/I, I 973 MEASURING CURRENT ECONOMiC FLUCTUATIONS BY JULIUS SIIISKIN* This paper extends earlier studies on the separation of systematic rnoremenrs in economic time series- - the signalsfrom the irregular fluctuationsthe noise. While earlier studies were concerned primarily with historical relationships, this new study is concerned primarily with the most recent figures. ft provides noise-signal ratios for current data for 18 principal economic indicators and demonstrates that the noise-signal ratio is higher for current than for historical obseruations. It concludes that we usually cannot tell whether a given series was rising or falling cyclically between the latest two months, hut we usually can tell whether it was rising or falling between the current month and another about three months earlier. I. TIlE ISSUES Economists have found it useful to consider economic time series fluctuations as a composite of systematic and irregular movements. The systematic movements in the economy--the signalsreveal seasonal patterns, cyclical movements, and long-term trends. The irregular fluctuations--the noiseare a composite of erratic real world occurrences and measurement errors. Separation of the systematic components provides a better basis for studying causal factors and forecasting changes in economic activity. Separation of the irregular components provides a basis for balancing costs of