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BASE YEAR ADJUSTMENTS IN PROJECTIONS SUITE PMP Summit June 2014 Pittsburgh PA.

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Presentation on theme: "BASE YEAR ADJUSTMENTS IN PROJECTIONS SUITE PMP Summit June 2014 Pittsburgh PA."— Presentation transcript:

1 BASE YEAR ADJUSTMENTS IN PROJECTIONS SUITE PMP Summit June 2014 Pittsburgh PA

2 What’s covered What some states are doing in order to produce non- standard projections How Projections Suite can be tweaked to do step-ahead adjustments and non-standard projections

3 What’s not covered Is doing step-ahead adjustments a good idea? (That’s for YOU to decide!)

4 Currently…. According to survey results, nine states are adjusting the base year at some point, either for long-term industry projections, short-term industry projections, or both Four more are considering it This number could easily grow in the future

5 Short-term Industry Projections In PS, time frame is locked in place at two years However, there are no restrictions on what is used for the base quarter

6 STIP - Current practices Use the most recent QCEW data By the time the state is ready to start on a new round, QCEW is often up to date (although data might be preliminary) Project employment data to the new base quarter using CES growth rates Use CES data directly Variable data must also be projected if OLS/VAR/BVAR models using variables are to be utilized

7 STIP – Fixing the variable issue in PSR Actually project values for desired variables to be saved in Leading Index Use dummy data for at least one variable through the base month, and save that variable in Leading Index In PSR, choose the Related Industries models in OLS, VAR and BVAR. Note: Without some kind of variable data present, the Tournament can’t be run

8 Long-term Industry Projections In PS, more variety allowed in terms of projection period Base year and projected year can theoretically be set to any value However, some of the assumptions underlying the models may not necessarily be applicable for a non-10-year projection period As always, responsibility lies with the analyst to justify any model used

9 LTIP – Current practices Use the most recent QCEW data to extend the base year Use CES data Interpolate from most recent year available

10 Time series models Linear, logarithmic, etc. Changing the base year while leaving the projection year unchanged will necessarily result in a different equation… …resulting in a different projection and growth rate

11 Shift-share and OLS Models Depend on projected values for national employment and any variables used in OLS models National projected values for employment and variables are ONLY provided for the current round Using shift-share and OLS models are therefore possible with step-ahead adjustments, as long as the projected year is kept the same

12 Changing the projected year National data becomes ????? Possibility: Impute a new projected value

13 Conclusion It’s possible to use modified projection periods in PS The process won’t be as clear-cut as in standard projections periods Be careful!


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