Tracking economic growth in real time during the pandemic: a rationale for a revision of €-coin

Valentina Aprigliano (), Simone Emiliozzi and Marco Lippi
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Valentina Aprigliano: Bank of Italy

No 703, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Covid-19 caused an abrupt disruption in the world economy and posed big challenges to macroeconomic and time-series analysis. The deep trough in the business cycle was unprecedented in momentum and magnitude, was not approached smoothly, and the pandemic shock was not heralded by any warning signal, as opposed to the run-up to crises triggered by economic factors. Differently from the global financial crisis and the sovereign debt crisis, when €-coin performed quite well, during the pandemic the indicator failed to track the intensity of the collapse and of the subsequent recovery in euro area economic activity. In this paper, we investigate the causes of the slow reaction of €-coin to the Covid-19 outbreak and we describe some revisions made to the indicator to get it back on track in estimating the medium- to long-run growth of the economy during the pandemic.

Keywords: measurement of economic activity; business cycle; Covid-19; frequency domain; dynamic factor model (search for similar items in EconPapers)
JEL-codes: E32 E66 (search for similar items in EconPapers)
Date: 2022-06
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_703_22

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