Thursday , November 26 2020
Home / Amol Agrawal: Mostly Economics / Don’t take it for granted: the value of high-quality data and statistics for the ECB’s policymaking

Don’t take it for granted: the value of high-quality data and statistics for the ECB’s policymaking

Summary:
On 20 October 2020, UN Statistical Division started to celebrate World Statistics Day every 5 years. Thus, 20 Oct 2020 becomes the third such day. Isabel Schnabel of the ECB writes a blogpost on the occasion. She says we take good quality stats as granted. However, it requires tremendous effort and governance to produce good quality data. ECB is central to this data process in Euroarea countries: Data and statistics are indispensable inputs for decision-making by governments and public institutions. As a prime example of a data-driven institution, the ECB relies every day on data and statistics for analysing the economic development of the euro area, and the Governing Council takes monetary policy decisions after carefully examining a broad range of economic and financial

Topics:
Amol Agrawal considers the following as important: , , ,

This could be interesting, too:

Amol Agrawal writes Responses of International Central Banks to the COVID-19 Crisis

Amol Agrawal writes Regulating Fintech in Europe: Lessons from the collapse of Wirecard

Amol Agrawal writes Gulags, crime, and elite violence: origins and consequences of the Russian mafia

Amol Agrawal writes Central Bank of Israel invests forex reserves in equity to boost returns

On 20 October 2020, UN Statistical Division started to celebrate World Statistics Day every 5 years.

Thus, 20 Oct 2020 becomes the third such day.

Isabel Schnabel of the ECB writes a blogpost on the occasion. She says we take good quality stats as granted. However, it requires tremendous effort and governance to produce good quality data. ECB is central to this data process in Euroarea countries:

Data and statistics are indispensable inputs for decision-making by governments and public institutions. As a prime example of a data-driven institution, the ECB relies every day on data and statistics for analysing the economic development of the euro area, and the Governing Council takes monetary policy decisions after carefully examining a broad range of economic and financial indicators.

Three key ingredients are needed for data to provide a foundation for sound decision-making: appropriate governance, particularly the independence of official statistics, proper procedures to guarantee high data quality and effective communication.

At the ECB, statisticians and economists are continuously working to improve on these fronts, serving both our expert data users and European citizens, as we have done since the inception of the Economic and Monetary Union. First, several initiatives are under way to enhance the quality of statistics while reducing the administrative costs for reporting agents. Second, we are investigating new ways to leverage both existing and new (big) data sources and data science techniques to improve our economic analysis and gain additional insights into emerging policy questions related to issues such as climate change, crypto-assets and the distribution of income and wealth. Third, we are working on making our statistics more accessible, both to experts and the general public, including through the use of digital media and by improving our Statistical Data Warehouse.

World Statistics Day is a good time to remember that we should not take high-quality and trustworthy data and statistics for granted. It requires tremendous effort, good governance and permanent striving for improvement in order to provide a reliable foundation for the ECB’s and other institutions’ decision-making.

ECB is using interactive charts to explain and connect data to people:

The production of independent and high-quality statistics is a necessary, but not sufficient, precondition for fact-based policymaking. In addition, effective communication of statistics is pivotal because it allows policymakers and other interested parties to understand the data and use them for their purposes. Accessible communication of statistics also enables people to understand policy decisions and hold decision-makers accountable for their actions.

At the same time, the rapid increase in the quantity of data requires statisticians to employ more sophisticated communication methods. Presenting data in clearly laid out tables is no longer enough. Given changes in user requirements and technological developments, modern techniques are needed to facilitate the presentation and digital sharing of data. Visuals and graphics are particularly powerful tools for communicating complex statistical information to the public, particularly if presented in an interactive way.[18]

As frequently underlined by President Christine Lagarde, the ECB is committed to improving its communication. By explaining its objectives and decisions, the ECB ultimately makes its monetary policy more effective. Furthermore, as a public institution, the ECB is transparent and accountable to all Europeans. Explaining the tasks of the ECB necessarily entails informing people about the statistics and economic data underlying our decisions in a manner that is as accessible as possible.

That is why the way we communicate will be a central element of the ongoing ECB monetary policy strategy review. Throughout this process, the ECB will take into account the views of civil society through a series of ECB Listens events, and the understanding of data, in particular of our measure of inflation, will clearly play an important role in this dialogue.

The ECB has therefore created a dedicated website to present and communicate data in an accessible way: the Euro Area Statistics website, available in 23 official EU languages. This website aims to improve the communication of central banking statistics by presenting selected core data series as interactive visuals, thereby facilitating the comparison and use of both euro area and national statistics. A core function of the website is that it allows users to easily share statistics in digital form, including through social media or by embedding infographics into other digital publications.

The chart below presents an example of a diagram created on the Euro Area Statistics website (Chart 6). The chart condenses a large set of individual statistics into one comprehensive visual representation of the underlying data. It illustrates both the holdings and the issuance of debt securities by different financial market participants and enables users to explore complex statistical information interactively.

Chart 6

Interactive presentation of the issuance and holdings of long-term debt securities in the euro area.

(the interactive version of the chart is available on the Euro Area Statistics website)

Don’t take it for granted: the value of high-quality data and statistics for the ECB’s policymaking

Source: ECB, Euro Area Statistics website.
Note: This chart illustrates which types of financial market participants are issuing long-term debt securities (light blue – liabilities) and which types of financial market participants are holding these long-term debt securities (dark blue – assets), expressed in outstanding amounts. The category “rest of the world” comprises long-term debt securities issued outside the euro area but held inside the euro area (light blue – liabilities); it also includes holdings of long-term debt securities issued in the euro area but held abroad (dark blue – assets). For each financial market participant, the width of the bar represents the absolute outstanding amount of long-term debt securities issued and held. Dark and light blue indicate the relative share of total issuance and total holdings of long-term debt securities by each type of financial market participant. An interactive version of this chart is available on the Euro Area Statistics website. The data is updated continuously using the latest data releases.

Our most recent innovation is a digital publication that explains the importance of money, credit and central bank interest rates for households in the euro area. This method of publication – in the form of a highly interactive communication tool designed to better explain the ECB’s tasks and policies – will be expanded to numerous other topics. The website makes extensive use of interactive charts and illustrations, which are automatically updated when new data become available. We plan to make more use of such interactive communication tools, complemented by short explainers and easily understandable videos, to improve people’s understanding of key statistical concepts

Interesting…

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

Leave a Reply

Your email address will not be published. Required fields are marked *