Analyzing Economic Effects of Extreme Events Using Debit and Payments System Data

This paper uses payments system data to study the impact on personal consumption expenditure, and therefore on economic activity, of occasional extreme events. The usual quarterly data supplied by central statistical agencies are of little use to policy makers for monitoring effects of transitory events, as the impacts of events lasting a few days or weeks may be obscured in time-aggregated data. However, technological advances of the past several years have resulted in new high-frequency data sources that could potentially provide more accurate and timely information on economic activity. Here we use daily Canadian debit transaction volume data, and business-day (five times per week) debit and check transaction volume and value data, to investigate the impact on consumer expenditure of several extreme events: the September 11 2001 terrorist attacks, the SARS epidemic in the spring of 2003, and the August 2003 electrical blackout. Contrary to initial perceptions of these events, we find only small and transitory effects.