Toward a Better Measure of Real Time Economic Conditions: An Application of the Stock/Watson Methodology to the Case of Rhode Island

19 Pages Posted: 28 Jul 2011

See all articles by Edinaldo Tebaldi

Edinaldo Tebaldi

Bryant University

Logan J. Kelly

University of Wisconsin - River Falls - College of Business & Economics

Date Written: July 27, 2011

Abstract

This study develops an economic indicator tailored to measure economic conditions at the state level by recognizing a state's economy is an integrated part of the region and responds to both regional and national economic outlooks. This paper applies our methodology to the state of Rhode Island. In the case of Rhode Island, the addition of a regional economic indicator appears to make a significant improvement over the the Philadelphia FED Coincident Index. Moreover, the robustness analysis above shows that economic indicator developed to tracks the business cycles in Rhode Island perform quite well and that the indicator is robust to various identification schemes. Therefore, we believe this preliminary study indicates that it is worthwhile to expand this project to include all fifty states.

Keywords: Current Index, Leading Index, Rhode Island

JEL Classification: C43, E39

Suggested Citation

Tebaldi, Edinaldo and Kelly, Logan J., Toward a Better Measure of Real Time Economic Conditions: An Application of the Stock/Watson Methodology to the Case of Rhode Island (July 27, 2011). Available at SSRN: https://ssrn.com/abstract=1896335 or http://dx.doi.org/10.2139/ssrn.1896335

Edinaldo Tebaldi (Contact Author)

Bryant University ( email )

1150 Douglas Pike
Smithfield, RI 02917
United States
401-2326901 (Phone)

Logan J. Kelly

University of Wisconsin - River Falls - College of Business & Economics ( email )

River Falls, WI 54022-5001
United States

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