A real-time regional accounts database for Germany with applications to GDP revisions and nowcasting

Abstract

Accurate real-time macroeconomic data are essential for policy-making and economic nowcasting. The rising interest in analyses at the sub-national level cannot be served as such data are currently not available. In this paper, I introduce a real-time database for German regional economic accounts. The database contains real-time information for nine macroeconomic aggregates and the 16 German states. I conduct both a revision analysis and a nowcasting experiment for real gross domestic product. By pooling the states together, the first official estimates show no systematic revision errors. The pooling, however, suppresses the revision characteristics of single states. For half of the 16 German states I find that the first estimates are no optimal predictions, thus, leaving room for improvements in the future. The real-time nowcasts for real gross domestic product growth based on a mixed-frequency vector autoregression are very accurate and beat several benchmark models. More regional data would help to better inform the model, thereby increasing its nowcast performance even further.