BBVA Research develops index to measure investments by firms and households in real time
This new and innovative indicator goes beyond credit/debit card consumer spending analysis by also using aggregated data on firm-firm and individual-firm financial transfers. As Sirenia Vázquez, principal economist at BBVA Research explains, "our indicators approximate investment through monetary transfers from firms and individuals (in the case of residential investment) to the firms that produce fixed investment assets." Thus, "monetary transfers from agents to these firms are produced in exchange for investment goods produced in the economy and therefore reflect investment demand."
The data can be disaggregated according to the National Classification of Economic Activity (CNAE) and geolocalized, so "we can examine in detail the evolution of the investment components and where these goods are being produced," adds Sirenia Vázquez.
BIG DATA INVESTMENT INDICATORS: TOTAL INVESTMENT
(% year-on-year, accumulated 28 days)
Investment indicators estimated from monetary transactions between firms and households to national firms that produce fixed assets defined by the NACE codes. * Real series deflated by producer prices, except for Peru whose deflator is the wholesale price index and Spain, which uses the implicit deflator of the investment component of GDP on the demand side. Forthcoming (Carvalho et al, 2021).
One of these indicators’ advantages is to show the investment cycle and the business cycle in real time and in high definition. Álvaro Ortiz, head of big data research at BBVA Research, adds that, “in general terms, investment indicators have shown us in advance a behavior that is quite adjusted to the final investment results. Thanks to them we were able to not only see how quickly global value chains’ interruption due to COVID was transferred to investment, but also the rapid recovery of investment, especially capital goods. ”
Certain investment indicator applications have been accepted for publication both at statistical office and central bank meetings organized by the Central Bank of Chile at the end of September, and by the Advanced Analytics conference jointly organized by the European Central Bank and the Bank of England which will take place in November.
“This work is having an important echo in the academic community and in the fields of statistical offices and central banks. Investment indicators are a step forward in the use of big data on financial transactions. It will not be the last and we are already working on indicators to analyze the international sector and measure the evolution of activity sectors in real time,” says Álvaro Ortiz.
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