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Lead and Lag

Lead and Lag is used to shift one variable ahead or back in time so that the movements of two variables are more closely aligned if there is a time lag between a change in one variable and its impact on another.

To lead a series use CTRL + right arrow and to lag a series use CTRL + left arrow

 

Example 1

 

A change in the price of crude oil will impact the price consumers pay for energy, just not immediately. It usually takes around one month for a change in the price of crude oil to be reflected in consumer energy prices. We can create a graph to compare the two by doing the following:

  1. Open JCEM@USNA by doing one of the following:
    • Navigate through the menus.
    • ALT + D for USNA then N for JCEM
    • ALT + N and enter JCEM@USNA in the formula bar

  2. Add PZTEXP@USECON
    1. Add a variable by doing one of the following:
      • Click from the Graph Settings toolbar
      • ALT + V
    2. Open PZTEXP@USECON by doing one of the following:
      • Navigate through the menus
      • ALT + D for USECON N for PZTEXP
      • ALT + N and enter PZTEXP@USECON in the formula bar

  3. Apply a lead of one month to PZTEXP@USECON by doing CTRL + right arrow

    4. Notice that there is a [-1] next to the title of PZTEXP@USECON to indicate a lead of 1 month has been applied.

Example 2

 

Changes in employment tend to lag the performance of the overall economy, that is, a weaker economy leads to weaker employment and a stronger economy leads to stronger employment, but not immediately. We can create a graph to compare the two by doing the following:

  1. Open GDPH@USECON by doing one of the following:
    • Navigate through the menus.
    • ALT + D for USECON then N for GDPH
    • ALT + N and enter GDPH@USECON in the formula bar

  2. Apply function 4: y/y percent change to GDPH@USECON by doing one of the following:
    • F + 4
    • Go to Function > Basic or click from the Graph Settings toolbar then select option 4

  3. Add LAPRIVA@USECON
    1. Add a variable by doing one of the following:
      • Click from the Graph Settings toolbar
      • ALT + V
    2. Open LAPRIVA@USECON by doing one of the following:
      • Navigate through the menus
      • N for LAPRIVA

        • Not required to use ALT + D as we are already in the USECON database

      • ALT + N and enter LAPRIVA in the formula bar

        • Not required to enter LAPRIVA@USECON as we are already in the USECON database

      3. Basic functions carry over when we add another variable, so yryr% was applied to LAPRIVA@USECON since we applied it to GDPH@USECON

  4. Change the aggregation of LAPRIVA@USECON to quarterly by doing one of the following:
    • A + Q + Enter
    • Go to Tools > Aggregation, select Quarterly and click OK

  5. Apply a lag of one month to LAPRIVA@USECON by doing CTRL + LEFT arrow

    6. Notice that there is a [+1] next to the title of LAPRIVA@USECON to indicate a lag of 1 month has been applied.