Your Economic Data

Data, the raw building blocks of your empirical investigation.

This entry will briefly discuss how your research question helps in the data collection process. Please note that here I am referring to secondary data, that is data that has been collected by a third party. I’ll write an article at some point discussing the different types of data available for econometric research.

As I discussed previously, your research question is of dire importance. Not only does your research question keep you focused, it also helps direct your data search. Lets revisit my thesis question and you’ll that even with minimal economic theory you’ll be able to identify what data you need for this inquiry.

So here’s that research question again:

Aim: 

To assess the impact of an exchange rate movement on a set of South African macroeconomic variables.

Specific objectives:

• To determine the effect of an exchange rate movement on the development of the South African Gross Domestic Product.

• To determine the effect of an exchange rate movement on South African consumer prices.

• To determine the effect of an exchange rate movement on the interest rate setting behavior of the SARB.

You should be able to identify data specific key words above, specifically; South Africa, exchange rate. Gross Domestic Product, consumer prices and interest rates.

From this we can see that in this instance the data that we are looking for South Africa, specifically GDP (income), exchange rate, price level (CPI) and interest rate data. The next question we need to ask ourselves is were is the best place to get your data. Fortunately all countries collect data on the performance of their economy, however the quality of that data is sometimes questionably.

For South African economic data the first places to look are the South African Reserve Bank (SARB) and Statistics South Africa (Statsa) websites. You can also obtain data from international sources like the World Bank, though be care and not to use to many sources as different agencies use different definitions and calculations, best be consistent.

The best place to look should be the SARB’s website as it manages South Africa’s monetary policy and all the variables mentioned in the research question also feature in the Taylor rule of an open economy. A Taylor rule is simply an expression that predicts the behavior of a central bank as function of a concise set of variables' deviations from their trend levels.

The next step is pretty simple, go to the website and look at the on-line statistical query page. Here you’ll be able to search their website for the economic data that you are interested in.

For my research I used the nominal effective exchange rate or NEER, real GDP in 2005 constant prices, CPI and the interbank rate. You could also use the REPO rate which is the SARB’s official policy tool (I’ll explain why I didn’t next time). I also used a couple other variables in the final version of my model but we’ll get there eventually.

You find that the interbank and REPO rates don’t appear when you search for them. This was a source of much frustration for me too, I promise that they are on the website however and I promise I’ll publish a link next time but for now consider this homework. I will also eventually provide the raw dataset once its time for us to start playing. You’ll also find that the best place to find CPI data is actually Statistics SA.

So have fun browsing the site for data, look at the various options available to you such the data frequency and time periods available. Can you see any issues on the horizon?

Until next time