Nowcasting GDP: An Application to Portugal

João B. Assunção and Pedro Afonso Fernandes ()
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João B. Assunção: Católica Lisbon Forecasting Lab (NECEP), Católica Lisbon Research Unit in Business & Economics (CUBE), Católica Lisbon School of Business & Economics, Universidade Católica Portuguesa, Palma de Cima, Building 5, 1649-023 Lisboa, Portugal
Pedro Afonso Fernandes: Católica Lisbon Forecasting Lab (NECEP), Católica Lisbon Research Unit in Business & Economics (CUBE), Católica Lisbon School of Business & Economics, Universidade Católica Portuguesa, Palma de Cima, Building 5, 1649-023 Lisboa, Portugal

Forecasting, 2022, vol. 4, issue 3, 1-15

Abstract: Forecasting the state of an economy is important for policy makers and business leaders. When this is conducted in real-time, it is called nowcasting. In this paper, we present a method that shows how forecasting errors decline as additional contemporaneous information unfolds and becomes available. When the economic environment changes fast, as has happened often in the last decades across most developed economies, it is important to use forecasting methods that are both flexible and robust. This can be achieved with bridge equations and non-parametric estimates of the trend growth using only publicly available information. The method presented in this paper achieves, by the end of a quarter, an accuracy that is equivalent to the methods used by official entities.

Keywords: time series; macroeconomic forecasting; nowcasting; error correction models; combining forecasts (search for similar items in EconPapers)
JEL-codes: A1 B4 C0 C1 C2 C3 C4 C5 C8 M0 Q2 Q3 Q4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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