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Know the Present to Understand the Future: Nowcasting and Forecasting the Finnish Economy

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  • Fornaro, Paolo

Abstract

This report concerns the relationship between forecasting and nowcasting (i.e. the production of real-time estimates of key economic indicators), and the developments in terms of nowcasting research and applications in Finland. I first look at few existing nowcasting applications provided by international and Finnish economic institutions. Subsequently, I consider the current Statistics Finland publications lags of real economic activity indicators and argue that there is ample room for improvement in terms of nowcasting and providing more timely estimates. Finally, I describe the current research project, conducted by Statistics Finland and Etla, aimed at producing faster estimates of real economic activity indicators, and I highlight the methodological and data-related challenges we face. While the project is still in its initial phase, the preliminary results are promising, indicating the possibility of a substantial reduction of the statistical publication lags, at the cost of a minor increase in the revision errors.

Suggested Citation

  • Fornaro, Paolo, 2017. "Know the Present to Understand the Future: Nowcasting and Forecasting the Finnish Economy," ETLA Brief 59, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:briefs:59
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    1. Lippi, Marco & Reichlin, Lucrezia & Hallin, Marc & Forni, Mario & Altissimo, Filippo & Cristadoro, Riccardo & Veronese, Giovanni & Bassanetti, Antonio, 2001. "EuroCOIN: A Real Time Coincident Indicator of the Euro Area Business Cycle," CEPR Discussion Papers 3108, C.E.P.R. Discussion Papers.
    2. Tuhkuri, Joonas, 2016. "Forecasting Unemployment with Google Searches," ETLA Working Papers 35, The Research Institute of the Finnish Economy.
    3. Fornaro, Paolo & Luomaranta, Henri & Saarinen, Lauri, 2017. "Nowcasting Finnish Turnover Indexes Using Firm-Level Data," ETLA Working Papers 46, The Research Institute of the Finnish Economy.
    4. Fornaro, Paolo & Luomaranta, Henri, 2018. "Aggregate fluctuations and the effect of large corporations: Evidence from Finnish monthly data," Economic Modelling, Elsevier, vol. 70(C), pages 245-258.
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