# Forecasting the Relative Direction of Economic Growth by Using the Purchasing Managers` Index*

*Okan Eren*

*Iktisat Isletme ve Finans*, 2014, vol. 29, issue 344, 55-72

**Abstract:**
This paper aims to predict the relative direction of the growth rate of Turkish real gross domestic product (GDP) by using the purchasing managers` index (PMI) data and to quantify the predictive performances of three alternative models: naïve, constant and variable models. Naïve model employs only the GDP data while the other two use both GDP and PMI data. The median growth rate is chosen as the main reference rate. In this case, the success rate of the forecasts by the variable (constant) model is 17.2 (3.4) percentage points higher than that of the naïve model. The calculations for 8 other reference rates also lead to similar findings. The variable model has a higher success rate than the constant model at 4 out of 9 reference rates, while the constant model outpaces the variable model at only 2 reference rates. Moreover, the time-invariant PMI threshold that corresponds to a stagnant economic activity is found to be 47.5, any PMI reading above (below) which implies an expansion (a contraction)

**Keywords:** Forecasting Turkish Economic Growth; Constant Growth Threshold; Purchasing Managers’ Index (PMI); Time-varying Growth Threshold; Directional Analysis (search for similar items in EconPapers)

**JEL-codes:** C10 C53 (search for similar items in EconPapers)

**Date:** 2014

**References:** Add references at CitEc

**Citations:** View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

**Related works:**

This item may be available elsewhere in EconPapers: Search for items with the same title.

**Export reference:** BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text

**Persistent link:** https://EconPapers.repec.org/RePEc:iif:iifjrn:v:29:y:2014:i:344:p:55-72

**Ordering information:** This journal article can be ordered from

http://www.iif.com.t ... ew/iif.2014.344.4241

Access Statistics for this article

Iktisat Isletme ve Finans is currently edited by *Ali Bilge*

More articles in Iktisat Isletme ve Finans from Bilgesel Yayincilik

Bibliographic data for series maintained by Ali Bilge ().