Macroeconomic Nowcasting and Forecasting with Big Data

Data, data, data . . . Economists know it well, especially when it comes to monitoring macroeconomic conditions - the basis for making informed economic and policy decisions. Handling large and complex data sets was a challenge that macroeconomists engaged in real-time analysis faced long before "big data" became pervasive in other disciplines. We review how methods for tracking economic conditions using big data have evolved over time and explain how econometric techniques have advanced to mimic and automate the best practices of forecasters on trading desks, at central banks, and in other market-monitoring roles. We present in detail the methodology underlying the New York Fed Staff Nowcast, which employs these innovative techniques to produce early estimates of GDP growth, synthesizing a wide range of macroeconomic data as they become available

Economics of water recovery in the Murray-Darling Basin, Australia

We review recent water reforms and the consequences of water recovery intended to increase stream flows in the Murray-Darling Basin (MDB), Australia. The MDB provides a natural experiment of water recovery for the environment that includes (a) the voluntary buy-back of water rights from willing sellers and (b) the subsidization of irrigation infrastructure. We find that (a) the actual increase in the volumes of water in terms of stream flows is much less than claimed by the Australian government; (b) subsidies to increase irrigation efficiency have reduced stream and groundwater return flows; (c) buy-backs are much more cost effective than subsidies; (d) many of the gains from water recovery have accrued as private benefits to irrigators; and (e) more than a decade after water recovery began, there is no observable basin-wide relationship between volumes of water recovered and flows at the mouth of the River Murray.R. Quentin Grafton and Sarah Ann Wheele