1. United Nations Statistics Division Overview of handbook on rapid estimates Expert Group Meeting on Short-Term Economic Statistics in Western Asia 16-18 February 2016 Amman, Jordan

2. Outline of presentation  Introduction to rapid estimates  Objectives of the handbook  Governance structure  Outline of the handbook  Status and way forward 2

3. Introduction to rapid estimates  Rapid estimate, also called early estimate, refers to a timely numerical evaluation (i.e. an estimate) of an economic variable of interest, using the real-time data flow, in such a way that an early picture of the present, the recent past or the near future can be formed 3 What is a rapid estimate? Real-time data flow  Is the information set available to people (official statisticians, researchers, etc.) at a specific point in time  Includes soft, hard, financial data  Usually provides an incomplete data coverage of the reference period at a specific point in time

4. Objectives of the handbook  Provides international statistical guidance based on best practices and harmonized principles for the compilation and reporting of rapid estimates  Outlines practical and suitable compilation methods and issues, drawing on a wide range of experience and expertise 4

5. Objectives of the handbook  Assists compilers in producing rapid estimates of key short-term macroeconomic indicators in a comparable manner, using best international practices  Assists countries that plan to set up a more comprehensive system of estimates of key macroeconomic indicators by Providing methodological foundations for the compilation of rapid estimates Offering practical guidance on individual steps and elements of the compilation process 5

6. Governance structure  Working group was established to prepare handbook Eurostat (lead agency) United Nations Statistics Division Statistics Netherlands National statistics offices of Mexico, Singapore and South Africa  Various experts have contributed to the preparation of the draft chapters 6

7. Outline of the handbook 7 Seven parts comprising 18 chapters Annex (Glossary)

8. Outline of the handbook  Chapter 1: Introduction: objectives, definitions, costs and benefits of rapid estimates Discusses the importance of timely economic information and the trade-off between timeliness and accuracy Identifies the advantages and drawbacks of rapid estimates  Chapter 2: Rapid estimates: different products for different purposes Provides a less formal description of some of the most commonly used rapid estimates by synthetically sketching their main features Provides a rationale to the disambiguation of a variety of rapid estimates, based on the identification of key elements which should be taken into account when characterizing them 8 Part I: Generalities

9. Outline of the handbook  Chapter 3: Forecasting and nowcasting macroeconomic variables: a methodological overview Presents a technical discussion of the techniques in forecasting and nowcasting  Chapter 4: The trade-off between timeliness and reliability: the perspective of a statistical agency Presents in detail the trade-off between timeliness and accuracy Discusses how a statistical agency acquires information and the resultant accuracy of the estimates 9 Part I: Generalities

10. Outline of the handbook  Chapter 5: An overview of modelling techniques for rapid estimates Provides non-technical overview of statistical and econometric techniques to construct rapid estimates Discusses advantages and drawbacks of the techniques  Chapter 6: A review of parametric and non parametric techniques for variable selection Reviews several econometric and statistical methods to handle variable selection, mainly in the context of multiple regression 10 Part II: Statistical and econometric techniques for rapid estimates

11. Outline of the handbook  Chapter 7: Model selection, model specifications and a typology of rapid estimates Presents the statistical and econometric models that are more suitable to producing a given type of rapid estimate 11 Part II: Statistical and econometric techniques for rapid estimates

12. Outline of the handbook  Chapter 8: Multivariate temporal disaggregation Reviews the methods of multivariate temporal disaggregation in the literature and evaluates their potential both from the theoretical and empirical standpoints  Chapter 9: A survey of econometric methods for mixed- frequency data Reviews the methods in the literature to deal with mixed frequency data and missing values due to publication lags Summarizes most significant empirical applications 12 Part III: Rapid estimates based on data available at different frequencies

13. Outline of the handbook  Chapter 10: Dynamic factor models: A review of the literature Presents the models and their most interesting extensions, main estimation methods, and tests of the number of factors Presents examples of the application of dynamic factor models to macroeconomic forecasting, the construction of short-term economic indicators and the analysis of monetary policy and the international economy 13 Part IV: Rapid estimates based on factor models

14. Outline of the handbook  Chapter 11: Forecasting with rich data: Model comparison and evidence from European countries Discusses the theory and practice of alternative macroeconomic forecasting models that utilize large datasets Compares the models in a forecasting on a set of European countries 14 Part IV: Rapid estimates based on factor models

15. Outline of the handbook  Chapter 12: Combined forecasting methods and rapid estimates Provides an overview of the literature on forecast pooling Evaluates the empirical performance of a set of alternative forecast combination methods for the principal European economic indicators (PEEIs)  Chapter 13: Combined forecasting techniques Provides an overview of the "combined forecast" theory Examines the practice of combined real time forecast using quarterly GDP growth rate and industrial production index growth rate 15 Part V: Rapid estimates based on combining forecasting techniques

16. Outline of the handbook  Chapter 14: Density estimates of combined forecasting Describes how various techniques can be used to combine competing density forecasts to obtain a single density forecast Evaluates the performance of combination forecasts in a pseudo real time forecast exercise for five PEEIs 16 Part V: Rapid estimates based on combining forecasting techniques

17. Outline of the handbook  Chapter 15: Aggregate versus disaggregate Discusses the construction of rapid estimates for aggregate variables using direct/aggregate and indirect/disaggregate modelling approaches Undertakes simulations, using real-time vintage data, to investigate the empirical performance of the aggregate and disaggregate approaches when nowcasting Euro Area GDP growth 17 Part VI: Aggregate versus disaggregate approaches to construct rapid estimates

18. Outline of the handbook  Chapter 16: Nowcasting Euro-Area GDP growth using multivariate models Presents a unified multivariate model to produce nowcasts of an aggregate variable which nests aggregate and disaggregate modelling approaches Considers approximations to the, in general, infeasible multivariate model Undertakes a detailed set of out-of-sample simulations, using real-time vintage data, to investigate the empirical performance of the mixed approach when nowcasting Euro area GDP growth 18 Part VI: Aggregate versus disaggregate approaches to construct rapid estimates

19. Outline of the handbook  Chapter 17: Quality assessment of rapid estimates Describes how to conduct a standard assessment of the quality of rapid estimates, including deciding when to publish them and how to monitor revisions to the estimates  Chapter 18: Constructing and evaluating rapid estimates: some examples Presents some empirical examples on how to construct and evaluate the quality of rapid estimates 19 Part VII: Constructing and evaluating rapid estimates

20. Outline of the handbook  Glossary of rapid estimates Was prepared by Eurostat Contains definitions of common terms in the literature based on a transparent and easily understandable framework Aims to avoid misunderstanding and communication problems due to a lack of common vocabulary and terminologies when talking about rapid estimates Was developed by Eurostat Is available on http://ec.europa.eu/eurostat/statistics- explained/index.php/Category:Rapid_estimates_glossaryhttp://ec.europa.eu/eurostat/statistics- explained/index.php/Category:Rapid_estimates_glossary 20 Annex

21. Status and way forward  Expert group is currently reviewing draft handbook  Draft handbook which will incorporate the comments from the expert group review is expected to be circulated for global consultation by summer 2016 21

22. 22 Thank you