Rae D. Rosen

Two New Indexes Offer a Broad View of Economic Activity in the New York-New Jersey Region

The authors develop two coincident indexes that provide a comprehensive measure of economic activity in New Jersey, New York State, and New York City.

USING REGIONAL ECONOMIC INDEXES TO FORECAST TAX BASES: EVIDENCE FROM NEW YORK

This paper evaluates the use of measures of regional economic activity to forecast tax revenues for New York State and New York City at 3-, 6-, and 12-month horizons. We construct sales- and withholding-tax base series and then apply the methodology of Stock and Watson (1989, 1991) to estimate regional indexes of coincident economic indicators. Employing an out-of-sample forecasting framework, we find that the use of the coincident indexes leads to statistically and economically significant improvements in tax base forecasts compared to those generated from univariate autoregressions. In addition, the coincident indexes produce forecasts that are generally more accurate than forecasts that rely on the use of the coincident indicators separately. Though our analysis focuses on forecasting movements in tax revenue at the state or local level, it is also intended to draw attention to the value the indexes may provide in other applications.

Is the Worst Over? Economic Indexes and the Course of the Recession in New York and New Jersey

The New York-New Jersey region entered a pronounced downturn in 2008, but the pace of decline eased considerably in spring 2009 and then leveled off in July, according to three key Federal Reserve Bank of New York economic indexes. These developments, in conjunction with a growing consensus that the national economy is headed for recovery, suggest that the worst may be over for the regions economy. However, a downsizing of the areas critical finance sector could pose a major risk to the economic outlook going forward--particularly for New York City.

The Linkage between Regional Economic Indexes and Tax Bases: Evidence from New York

This paper examines the linkage between economic activity and tax revenues for New York State and New York City. Drawing upon the methodology of Stock and Watson, we use a dynamic single-factor model to estimate indexes of coincident economic indicators. We also construct measures of the sales and withholding tax bases. To conduct an empirical analysis of the relationship between the indexes of economic activity and the tax base series, we use vector autoregression and error correction models. The results provide strong evidence that the coincident indexes contain useful information for explaining monthly growth in the tax bases. However, much less evidence exists of a statistically significant linkage from the tax bases to the coincident indexes.

1996 Job Outlook: The New York-New Jersey Region

Major industrial and government restructurings have dominated employment reports in the New York-New Jersey region, leading to widespread pessimism about the regions job prospects. Nevertheless, for the past several years, the two states have managed to achieve modest job gains. In 1997, employment growth in New York and New Jersey will accelerate slightly as the pace of restructurings slows.