Joachim Nagel: Higher-frequency economic monitoring

Speech by Dr Joachim Nagel, President of the Deutsche Bundesbank, at a talk at the student seminar to mark the awarding of the Heinrich Hertz Guest Professorship, Karlsruhe, 5 October 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
05 October 2023

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1 Introduction

Mr Grießhaber,

Many thanks for your warm welcome and words of introduction. I am very pleased to be leading the student seminar on the day the Heinrich Hertz Guest Professorship is awarded – and at a university where I spent more than a decade in total.

Ladies and gentlemen, dear students,

My talk today will focus on frequencies. The term frequency and the name "Hertz" are closely linked: in physics and technology, frequencies are measured in hertz. The alternating current coming from the plug sockets in our homes has a frequency of 50 hertz, while the processors in modern computers operate at a clock frequency of several gigahertz.

In the economy, too, we work with different frequencies, although they are not measured in hertz. As macroeconomists, we can't conduct experiments like physicists do, let alone generate periodic processes at a predefined frequency. Moreover, economic processes are highly complex and usually unfold over an extended period of time, with a great number of different oscillations often overlapping.

And last but not least, when economists talk about frequencies, they are often referring not to the oscillation length of the economic processes themselves but to the length of time between the data points in statistical time series. For instance, there are economic time series in which a new data point is added only once a year – capital stock being a good example. In other time series, new data become available once a quarter or once a month. The best-known example of quarterly statistics is gross domestic product, or GDP. Information on industrial output, for instance, is available on a monthly basis.