Chambers, Ray, Weale, Martin and Youll, Robin
The Average Earnings Index
The Economic Journal, 110, (461), . (doi:10.1111/1468-0297.00509).
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Survey data are widely used to provide indicators of economic activity ahead of the publication of offcial data. This paper proposes an indicator based on a theoretically consistent procedure or quantifying firm-level survey responses that are ordered and categorical. Firms' survey responses are assumed to be triggered by a latent continuous random variable as it crosses thresholds.
Breaking tradition these thresholds are not assumed time invariant. An application to firm-level survey data from the Confederation of British Industry shows that the proposed indicator of manufacturing output growth outperforms traditional indicators that assume timeinvariant thresholds.
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