Forecasting GDP Using Leading Real Sector Indicators for Ghana:The Factor Models Approach

Victor Osei () and Joseph Acheampong
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Victor Osei: Bank of Ghana, Research Department, Special Studies Office,P.O .Box 2674 High Street Accra, Ghana
Joseph Acheampong: Bank of Ghana, Research Department, Balance of Payments Office, P.O .Box 2674 High Street Accra, Ghana

International Journal of Economics and Empirical Research (IJEER), 2013, vol. 1, issue 8, 90-98

Abstract: This paper evaluates the time series factor estimators using autoregressive model for the short-term forecasting of Ghana’s GDP growth based on the exploitation of early releases of monthly real sector indictors. The principal component analysis was performed using forecast equation on monthly datasets through a regression on factor estimators extracted from a small set of monthly real sector indictors. In general, the study revealed that factor models via principal component analysis performed pretty well in predicting the conditional expectations of the domestic economic activity. This study opens new insights for policy makers in Ghana.

Keywords: Real sector; leading indicators; GDP; factor models; forecasting (search for similar items in EconPapers)
JEL-codes: F11 F20 (search for similar items in EconPapers)
Date: 2013
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