Real-time Forecasts of Economic Activity for Latin American Economies

Download or read book Real-time Forecasts of Economic Activity for Latin American Economies written by Mr.Philip Liu and published by International Monetary Fund. This book was released on 2011-04-01 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Macroeconomic policy decisions in real-time are based the assessment of current and future economic conditions. These assessments are made difficult by the presence of incomplete and noisy data. The problem is more acute for emerging market economies, where most economic data are released infrequently with a (sometimes substantial) lag. This paper evaluates "nowcasts" and forecasts of real GDP growth using five alternative models for ten Latin American countries. The results indicate that the flow of monthly data helps to improve forecast accuracy, and the dynamic factor model consistently produces more accurate nowcasts and forecasts relative to other model specifications, across most of the countries we consider.