Aggregate Indicators of Economic Activity for Argentina: The Principal Components Method

Pedro Elosegui, Maria Garegnani () and Emilio Blanco

No 200832, BCRA Working Paper Series from Central Bank of Argentina, Economic Research Department

Abstract: The principal components methodology allows us to summarize the relevant information of a series of economic indicators. In this paper, this methodology is used on series commonly used by the BCRA to follow up aggregate demand and supply conditions. The principal components are assessed in terms of their correlation with the economic activity level and the price index evolution. In general, they have been found to be leading indicators of the business cycle (2 to 6 months) and significant predictors of the inflation rate. In particular, the performance of a demand indicator based on real time data (information available with a quarter lag) is especially outlined.

Keywords: Argentina; output gap; Phillips Curve; principal components (search for similar items in EconPapers)
JEL-codes: C32 E31 E37 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2008-02
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