GDP Nowcasting: Evaluating the cyclical conditions of the Argentine economy

Working papers | 2015 | N 69

Abstract

Having a correct evaluation of the cyclical conditions of the economy is crucial for making monetary policy decisions. Given that GDP figures are available with a significant delay, Nowcasting, a technique that allows for an immediate perception of the economic cycle, has been increasingly adopted by central banks. We developed a Nowcast exercise of GDP growth using two approaches: bridging equations and factor modeling. Both methods outperform an AR(1) benchmark in predictive capacity. Additionally, the Nowcast based on a factor model outperforms that of bridging equations. Finally, using the Giacomini and White (2004) test, we confirmed that these differences in predictive capacity are statistically significant.

JEL classification: C22, C53, E37