Aggregate indicators of economic activity for Argentina: The principal components method

Working papers | 2008 | N 32

Abstract

The principal components methodology allows for a synthetic summary of the relevant information from a series of economic indicators. In this work, this methodology is used on series usually used by the BCRA to monitor the evolution of demand and aggregate supply. The main components are evaluated in terms of their correlation with the level of economic activity and the evolution of the price index. It is found that they are generally leading indicators of the economic cycle (2 to 6 months) and significant predictors of the inflation rate. In particular, the performance of a demand indicator based on real-time data (information available with a quarter lag) stands out.

JEL classification: C32, E31, E37