Type of Activity:

NIESR Discussion Paper

Title:

The utility of expectational data: Firm-level evidence using matched qualitative-quantitative UK surveys

NIESR Author 1:

Silvia Lui

NIESR Author 2:

James Mitchell

NIESR Author 3:

Martin Weale

External Authors:

Discussion paper number:

343

Date:

Thursday, 29th October, 2009

JEL Classification:

Keywords:

External Web Link:

Link to PDF file of full version:

/pdf/dp343.pdf

Notes / Summary / Abstract:

This paper assesses the utility of qualitative expectational survey data at the
firm-level in terms of both their ability to anticipate firms’ subsequent retrospective,
but qualitative, reports of their performance but also these same firms’ quantitative
answers. The assessment requires access to a unique panel dataset which matches
firms’ responses to a leading qualitative tendency survey conducted by the Confederation
of British Industry with these same firms’ quantitative replies to a different
survey carried out by the Office for National Statistics. We employ nonparametric
tests of the so-called “best-case scenario” and introduce a weaker test for the coherence
between these two surveys and test whether the qualitative data contain
a(ny) signal about the quantitative data. We find that while firms’ qualitative expectations
are “best-case” predictions of their qualitative assessment of their output
growth they do not contain a signal about the quantitative data. But we can reject
the null hypothesis of noise for the retrospective qualitative data. We discuss this
apparent paradox and suggest that qualitative business survey data are more useful
for nowcasting than forecasting.