Research project is (co)funded by the Slovenian Research and Innovation Agency and by the Statistical Office

Project

Member of University of Ljubljana

School of Economics and Business

Code

V5-2346

Project

Monitoring short-term development of market economy in as real time as possible

Period

1.10.2023 - 30.6.2025

Range on year

Range in 2023: 0.16 FTE

Head

Mojca Bavdaž

Research activity

Social sciences/Economics

Research Organisation

Institute for Economic Research

Abstract

For most actors, having the most up-to-date and accurate information possible is crucial to operating successfully in today's economy. Adequate and, above all, timely reaction to possible changes in the state of the economy can sometimes be decisive for the survival of a company or even an industry. The indicator of the short-term trend of the market economy, which is published by SURS on a monthly basis with a two-month lag, is proving to be too late in these times of great turbulence, when decision-making is taking place at an ever faster pace. Therefore, based on a thorough review of good practices in the publication of real-time indicators abroad and the application of modern modelling methods, we propose a methodology that would make accurate estimates of short-term developments in the market economy available significantly faster, preferably as soon as possible at the end of the observation period, or shortly thereafter, preferably with a lag of only a few days.

Statistical offices in virtually all developed countries face a similar challenge, and it is not surprising that there has recently been a significant growth in the literature on the subject of (near) real-time forecasting, but to our knowledge, despite the intense development behind the walls of many offices, there is still no consensus on what would be the most advisable methodological approach to tackling the problem described above. The recent crises have called into question the methodological work of the past, the approaches of which made sense for a much more stable period than the one we are currently witnessing.

Researchers

SICRIS

The phases of the project and their realization

Our work towards developing a proposal for assessing the indicator in (near) real time will be split in three phases. First, a thorough review of the literature and current practices or development work of institutions in the national area (SURS, BS, UMAR) and in established foreign statistical offices will be carried out to gain insight into existing methods and used reliable data sources. In parallel, we will review the potentially useful data sources available in Slovenia and assess their relevance to the characteristics of the Slovenian market economy.

In the second phase, we will empirically verify the quality of the selected data sources, organise the data and undertake modelling, which is necessary because the currently used data collection methods (statistical and administrative) are not able to provide real-time data. The outcome of this phase will be an initial proposal for a methodology to assess the indicator.

In a third phase, we will evaluate the performance of the different modelling approaches on the basis of the prediction error on a test dataset, make any necessary adjustments and produce a final report with guidelines for the use of the new indicator in government statistics.

The work program will be implemented in 7 work packages:

- Project management and administration (Oct. 2023 – June 2025)

- Overview of the existing international and national methodology and practices in the in the field of short-term market economy trends from the perspective of the main activities (industry, construction, trade and services) (Oct. 2023 – Feb. 2024)

- Review of potentially useful data sources available in Slovenia (statistical, administrative and other) (Oct. 2023 – Mar. 2024)

- Analysis of the selected data sources (April 2024 – June 2024)

- Drafting a proposal for the methodology of the indicator, which should reflect the short-term movement of the market economy in real time or close to real time (t + a few days) (June 2024 - Sept 2024)

- Evaluation of the model performance (Oct 2024 – June 25)

- Dissemination (Oct 2023 – June 2025)

Expected results:

- Reporting to the contracting authority

- Summary report on national and foreign practices, and relevance of identified data sources

- Initial proposal for the methodology of the indicator

- Final report with guidelines for the use of the new indicator in government statistics.

- Dissemination report