Qualitative business surveys and the assessment of employment -- A case study for Germany

Business tendency surveys are a commonly accepted instrument for the assessment of the current business cycle course. Most of these surveys rely on qualitative questions about the current situation of the firms and about heir expectations for the next months. This paper analyzes whether qualitative questions about employment expectations are useful to assess actual employment changes. In Germany the Ifo Institute is specialized on business surveys. The German Ifo data are investigated using three different approaches: Smoothing techniques help to date turning points in the course of the series. Error correction models are used to analyze the general lead/lag relations and Probit models are used to estimate a threshold for the survey based indicator which helps to differentiate between an increase and an decrease in employment. All three methods indicate that the employment expectations form a leading indicator of actual employment changes.

[1]  Sabine Stephan,et al.  Leading Indicators of German Business Cycles. An Assessment of Properties / Frühindikatoren der deutschen Konjunktur. Eine Beurteilung ihrer Eigenschaften , 2000 .

[2]  A. Walden,et al.  The Econometric Modelling of Financial Time Series. , 1995 .

[3]  M. Werding.  Survivor Benefits and the Gender Tax-Gap in Public Pension Schemes Work Incentives and Options for Reform , 2005 .

[4]  H. Lütkepohl,et al.  Making Wald Tests Work for Cointegrated Var Systems , 1996 .

[5]  T. Mills,et al.  The Econometric Modelling of Financial Time Series. , 1995 .

[6]  Search Frictions, Credit Constraints and Firm Financed General Training , 2005 .

[7]  W. R. Schucany,et al.  Locating Exotherms in Differential Thermal Analysis With Nonparametric Regression , 1997 .

[8]  Suzanna De Boef,et al.  Testing for Cointegrating Relationships with Near-Integrated Data , 1999, Political Analysis.

[9]  Michael Berlemann,et al.  Forecasting Inflation via Experimental Stock Markets Some Results from Pilot Markets , 2005 .

[10]  Jan-Egbert Sturm,et al.  Ifo survey data in business cycle and monetary policy analysis , 2004 .

[11]  Erich Langmantel,et al.  Das ifo Geschäftsklima als Indikator für die Prognose des Bruttoinlandsprodukts , 1999 .

[12]  Siem Jan Koopman,et al.  Time Series Analysis by State Space Methods , 2001 .

[13]  T. Gasser,et al.  A Flexible and Fast Method for Automatic Smoothing , 1991 .

[14]  Ludger Woessmann,et al.  Computers and Student Learning: Bivariate and Multivariate Evidence on the Availability and Use of Computers at Home and at School , 2004, SSRN Electronic Journal.

[15]  Steffen R. Henzel,et al.  An Alternative to the Carlson-Parkin Method for the Quantification of Qualitative Inflation Expectations: Evidence from the Ifo World Economic Survey , 2005 .

[16]  Helmut Lütkepohl,et al.  Applied Time Series Econometrics , 2004 .

[17]  Jianqing Fan,et al.  Local polynomial modelling and its applications , 1994 .

[18]  C. Granger.  Some recent development in a concept of causality , 1988 .

[19]  M. Wand.  Local Regression and Likelihood , 2001 .

[20]  T. Gasser,et al.  Residual variance and residual pattern in nonlinear regression , 1986 .

[21]  Kai E. Sülzle.  Duopolistic Competition between Independent and Collaborative Business-to-Business Marketplaces , 2004 .

[22]  Sascha O. Becker,et al.  Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals , 2005, SSRN Electronic Journal.

[23]  Stefan Mittnik,et al.  Forecasting Quarterly German GDP at Monthly Intervals Using Monthly Ifo Business Conditions Data , 2004, SSRN Electronic Journal.

[24]  G. Maddala,et al.  Unit roots, cointegration, and structural change , 1998 .

[25]  Guohua Pan,et al.  Local Regression and Likelihood , 1999, Technometrics.

[26]  Klaus Abberger,et al.  Nonparametric Regression and the Detection of Turning Points in the Ifo Business Climate , 2004, SSRN Electronic Journal.

[27]  Helmut Lütkepohl,et al.  Applied Time Series Econometrics , 2004 .

[28]  Clive W. J. Granger,et al.  Some recent developments in a concept of causality , 2001 .

[29]  David F. Hendry,et al.  Co-Integration, Error Correction, and the Econometric Analysis of Non-Stationary Data , 1993, Advanced texts in econometrics.

[30]  Georg Goldrian,et al.  Handbuch der umfragebasierten Konjunkturforschung , 2004 .

[31]  Harm Bandholz.  New Composite Leading Indicators for Hungary and Poland , 2005 .