Macroeconomic Indicators: A Look From Within

In its research and advocacy efforts, the Lithuanian Free Market Institute (LFMI) used to deal with qualitative categories and display indifference to figures, puzzling traditional academic research institutes. Unfortunately, many regard only quantitative arguments as truly “scientific” or, in other words, worthy of confidence. Figures are utilised in economic discourses rather sloppily and incoherently, with scant regard being paid to their origin and freshness or correctness of their usage. This provides an open invitation to economic demagogy, which may entail grave consequences.
The sources of economic statistics in Lithuania are few in number. They include the State Statistics Department, the Central Depository, the Bank of Lithuania, international institutions, such as the International Monetary Fund and the World Bank, and independent experts. Macroeconomic indicators are calculated systematically only by the Statistics Department. Little wonder almost all truths advanced by economic policy analysts are predicated the data provided by the department.
One can hardly accuse the Statistics Department of being unproductive. Statistical yearbooks are thick, impressive volumes, teeming with figures in small print. They provide more than enough material for research. If you have concrete questions to answer, you feel like in a large store: you look at it in a daze, failing to select what you need. You are stuck either with the wrong type or the wrong size or the wrong “best-before” date.
Business strategists need data based on which they could make prudent decisions. They need quality data. Obviously, it is impossible to assess information with a critical eye if it comes from one source. Recognising the need for alternative evaluations of economic indicators, LFMI is launching an ambitious project directed towards analysis of macroeconomic indicators.
By casting doubt on the reliability of official statistics, LFMI makes no claim to remonstrate against the toil of the Statistics Department. The research will aim to generate different results by employing a different paradigm and different methods. The most important part of the project will consist of analysing and interpreting the results as well as comparing them with corresponding indicators furnished by other sources.
The subsequent research methodology will be based on the so-called “expert consensus” paradigm. The bulk of the data necessary for the analysis will be collected from experts, people who keep their fingers on the pulse. One of the renowned analyses of this kind is the Livingston survey conducted in the US since 1946. The survey targets both practitioners, including entrepreneurs and managers, and theoreticians, including academics and reporters. In our survey, data will be provided primarily by practising entrepreneurs, for their knowledge and opinion-which is predicated on empirical experience and risk-are made public all too rarely.
The questionnaire will contain a fairly short set of macroeconomic indicators. Respondents will be asked to provide data, not related to their company or industry or business circle, but reflecting the country’s reality. Naturally, the answers will be based on personal experience, but this is exactly what we are after. Respondents will be asked to assess the current situation and give a one-year forecast. Surveys will be conducted on a regular, semi-annual basis.
If one chooses to rely on a methodology like this, it is essential to highlight problems confronting its application (for those sceptical about it, it would be sensible to scrutinise the traditional survey methodology and stipulations related to it). The main problem pertains to those polled. It is not difficult to identify people with a firm grasp of the economic reality and economic trends. The problem is that they are very busy in terms of both time and mind. It should be borne in mind that a slipshod and negligent answer is worse than failure to answer altogether.
The project will not aim to provide a comprehensive reflection of Lithuania’s economy. Nor is it going to be confined to figures. On the contrary, it will be designed to reveal underlying economic trends and draw a reliable, albeit sketchy, snapshot of them. Our overriding goal is to demythologise figures and provide opportunities for market agents to get the drift of information streams so that they would utilise them in pursuit of their business objectives.