Julius Shiskin

English

Research Papers in Economics

This PDF is a selection from an out-of-print volume from the National Bureau
of Economic Research
Volume Title: Electronic Computers and Business Indicators
Volume Author/Editor: Julius Shiskin
Volume Publisher: UMI
Volume ISBN: 0-87014-371-9
Volume URL: http://www.nber.org/books/juli57-1
Publication Date: 1957
Chapter Title: FOREWORD to "Electronic Computers and Business Indicators"
Chapter Author: Julius Shiskin
Chapter URL: http://www.nber.org/chapters/c2724
Chapter pages in book: (p. 1 - 3)FOREWORD
rIfHIs
paper opens up the prospect
that many of the valuable analyti-
cal measures that economists and
statisticians rely upon for only the most
current figures on national economic
affairs can now be constructed on a prac-
tical, low-cost basis for a much wider
variety of economic data, through the use
of electronic computers. Monthly data
for local areas or regions, separate indus-
tries, or individual business firms can be
adjusted and analyzed by the same kinds
of techniques that serve to improve our
understanding of recent changes in the
national economy.Business manage-
ments can be better and more promptly
informed about current trends in their
own firms' operations and related fields.
One such improvement, for example, can
give those using the technique something
like a six-month lead In recognizing a
new trend over those using the simple
method that is now widely depended on.
Mr. Shiskin's report deals with a prob-
lem that has long perplexed observers of
current business conditions—the diffi-
cultyofseparating more meaningful
business trends from seasonal and irregu-
lar fluctuations. The problem is espe-
cially acute because, on a month-to-
monthbasis,seasonal andirregular
movements are usually much larger than
changes in the underlying cyclical (or
major)trend. The statistical adjust-
ments required to handle this problem—
correcting raw data for the number of
working days per month, adjusting for
seasonal variations, and smoothing irreg-
ular movements—involve large amounts
of computation. Consequently, although
their merits are well known to statisti-
cians, they have in the past been carried
out in a limited way or not at all. An
electronic computer program which pro-
vides for all these adjustments system-
atically and extremely rapidly has been
prepared and thoroughly tested. It is al-
ready being used by many government
agencies and is available to the general
public; several thousand monthly series
have been analyzed by the method.
Business concerns can, therefore, now
219have these adjustments made for their
own figures and kept up to date; and
business economists can have all impor-
tant economic indicators in adjusted
form. The computed seasonal factors
themselves will be useful in forecasting
seasonal load requirements and the like.
Further applications of the power of
electronic computers to handle complex
analyses of economic data are now being
developed and tested in a research pro-
gram being conducted by the National
Bureau of Economic Research. As these
tools find their way into practical use, as
they are modified in accordance with the
lessons of experience, and as their merits
and limitations become abetter under-
stood, we may expect a general improve-
ment in statistical intelligence at the
level of individual company activities,
as well as on the national level.
The electronic computer program de-
scribed in this paper was started by Mr.
Shiskin several years ago at the Bureau
of the Census, where he is chief economic
statistician. Mr. Shiskin received a Rock-
efeller Public Service Award for 1956—57
and has been devoting his efforts, while
on leave from the Census Bureau, to the
further exploration and testing of com-
puter techniques, including the one de-
scribed here. As a research associate of
the National Bureau of Economic Re-
search, heisdirecting,jointly with
me, a study of the application of elec-
tronic computers to economic statistics.
Several ways in which high-speed com-
puters can be used to improve our under-
standing of current business trends are
being investigated: (1) by faster applica-
tion and fuller use of the most reliable
statistical techniques employed by econ-
220
omists, (2) by the development of new
and improved measures for current eco-
nomic series, and (3) by more powerful
analyses of historical business fluctua-
tions. An advisory committee of distin-
guished economists and statisticians un-
der the chairmanship of W. Allen Wallis,
dean of the School of Business of the Uni-
versity of Chicago, is helping to guide the
research.Substantial contributions of
machine and programing time from
equipment manufacturers and a grant
from the National Science Foundation
have made the study possible. The par-
ticular computer program described in
the present report was developed with
the aid of a contribution of Univac pro-
graming and machine time from the
Sperry-Rand Corporation.
This paper is the first report on the
National Bureau project. A second, more
technical report, "Seasonal Adjustments
by Electronic Computer Methods," will
be published in the December issue of the
Journal of The American Statistical A sso-
ciation and as "NBER Technical Paper"
No. 12. It describes the seasonal adjust-
ment method in full detail and analyzes
the tests to which it has been subjected.
Additional tests are reported by Mr.
Shiskin in a paper presented at the Sep-
tember, 1957, meeting of the American
Statistical Association. Other phases of
the project are described briefly in the
Thirty-seventh Annual Report ofthe
National Bureau (May, 1957); full re-
ports on these will be issued as com-
pleted.
GEOFFREYH.MooRE
Associate Director of Research
National Bureau of Economic ResearchTABLE OF CONTENTS
The Problem
Types of Economic Fluctuations
Illustrative Series —SomeEconomic Indicators
Same-Month-Year-Ago Comparisons
The Electronic Computer Program
a) Eliminating Seasonal Variations
b) Working- and Trading-Day Adjustments
c)IroningOut Irregular Fluctuations
1. Summary Measures
2. MCD Span Moving Averages
VI. Present and Prospective Applications
Appendix A: Computational Steps and Sample Tables248
Appendix B: Basic Data and Sources for Eighteen
Business Indicators, 1956—57 258
writer wishes to acknowledge his obliga-
tion to Geoffrey H. Moore for valuable sugges-
tions at every stage in the preparation of this
paper and for contributions to recent tests and
extensions of the electronic computer program.
Harry Eisenpress programmed the method de-
scribed in this paper for the Univac and provided
helpful assistance in many other phases of the
work. Gerhard Bry, Donald J.Daly, Milton
Friedman, Leonard H. Lempert, Robert Lipsey,
Ilse Mintz, Boris Shishkin, and Willard L. Thorp
offeredconstructivecriticismsof anearlier
draft. The paper was edited by John Sibley, and
the charts were drawn by H. Irving Forman.
Sophie Sakowitz, Dorothy M. O'Brien, George
Stein, Sandra Renaud, and Henry Einhorn ren-
dered valuable statistical assistance.
221
Thanks are also due to the staff of the Bureau
of the Census and particularly to Howard C.
Grieves, Morris H. Hansen, and William N.
Hurwitz, for helping to get this program under
way and for encouragement and practical assis-
tance at critical stages.
This paper has been approved for publication
as a report of the National Bureau of Economic
Research by the director of research and the
Board of Directors of the National Bureau, in
accordance with the resolution of the board gov-
erning National Bureau reports (see the Annual
Report of the National Bureau of Economic
Research). It is to be reprinted as No. 57 in the
National Bureau's series of Occasional Papers.
ELECTRONIC COMPUTERS AND BUSINESS INDICATORS
JULIUS SHISKIN*
I.
II.
III.
IV.
V.
222
223
224
225
231
231
234
235
236
238
244

Electronic Computers and Business Indicators

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics