Nowcasting Norwegian household consumption with debit card transaction data
- Knut Are Aastveit, Tuva Marie Fastbø, Elenora Granziera, Kenneth Sætherhagen Paulsen and Kjersti Næss Torstensen.
- Working Paper
We use a novel data set covering all domestic debit card transactions in physical terminals by Norwegian households, to nowcast quarterly Norwegian household consumption. These card payments data are free of sampling errors and are available weekly without delays, providing a valuable early indicator of household spending. To account for mixed-frequency data, we estimate various mixed-data sampling (MIDAS) regressions using predictors sampled at monthly and weekly frequency. We evaluate both point and density forecasting performance over the sample 2011Q4-2020Q1. Our results show that MIDAS regressions with debit card transactions data improve both point and density forecast accuracy over competitive standard benchmark models that use alternative high-frequency predictors. Finally, we illustrate the beneﬁts of using the card payments data by obtaining a timely and relatively accurate now cast of the ﬁrst quarter of 2020, a quarter characterized by heightened uncertainty due to the COVID-19 pandemic.
Norges Bank’s working papers present research projects and reports that are generally not in their final form. Other analyses by Norges Bank’s economists are also included in the series. The views and conclusions in these documents are those of the authors.
ISSN 1502-8190 (online)