Short-Term GDP Forecasting Using Bridge Models: a Case for Chile
AbstractThe aim of this document is to provide a forecasting tool that facilitates understanding economic developments in a timely manner. This is pursued through the Bridge Model approach by using it to relate a large set of monthly indicators to Chilean GDP and its main components. The outcome is a set of simple equations that characterize reasonably well total GDP and the feasible supply- and demand-side components based on a small set of relevant indicators. The selected equations generally provide better short-term forecasts than simple autoregressive models. However, if needed, the equation selection methodology is straightforward enough to update the equations easily making it an attractive tool for real-time forecasting.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 626.
Date of creation: May 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-06-18 (All new papers)
- NEP-CBA-2011-06-18 (Central Banking)
- NEP-FOR-2011-06-18 (Forecasting)
- NEP-MAC-2011-06-18 (Macroeconomics)
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