In periods of unusual weather, forecasters face a problem of interpreting economic data: Which part goes back to the underlying economic trend and which part arises from a special weather effect? In this paper, we discuss ways to disentangle weather-related from business cycle-related influences on economic indicators. We find a significant influence of weather variables at least on a number of monthly indicators. Controlling for weather effects within these indicators should thus create opportunities to increase the accuracy of indicator-based forecasts. Focusing on quarterly GDP growth in Germany, we find that the accuracy of the RWI short term forecasting model improves but advances are small and not significant.
weather short term forecasting bridge equations forecast accuracy