A bottom-up approach for forecasting GDP in a data-rich environment. Issue 10 (7th June 2018)

• Record Type: Journal Article
• Authors: Dias, Francisco; Pinheiro, Maximiano; Rua, António
• Is Part Of: Applied economics letters. Volume 25:Issue 10(2018)
• Page Start: 718
• Page End: 723
• Publication Date: 2018-06-07
• Subjects: Forecasting -- factor models -- bottom-up approach -- GDP; C22 -- C53; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2017.1361000
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: In an increasingly data-rich environment, the use of factor models for forecasting purposes has gained prominence in the literature and among practitioners. Herein, we assess the forecasting behaviour of factor models to predict several GDP components and investigate the performance of a bottom-up approach to forecast GDP growth in Portugal, which was one of the hardest hit economies during the latest economic and financial crisis. We find supporting evidence of the usefulness of factor models and noteworthy forecasting gains when conducting a bottom-approach drawing on the main aggregates of GDP.