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Forecasting growth and inflation in an enlarged euro area


  • Thomas Flavin

    (Department of Economics, Finance and Accounting, NUI Maynooth, Ireland)

  • Ekaterini Panopoulou

    (Department of Statistics and Insurance Science, University of Piraeus, Greece)

  • Theologos Pantelidis


We compare models for forecasting growth and inflation in the enlarged euro area. Forecasts are built from univariate autoregressive and single-equation models. The analysis is undertaken for both individual countries and EU aggregate variables. Aggregate forecasts are constructed by both employing aggregate variables and by aggregating country-specific forecasts. Using financial variables for country-specific forecasts tends to add little to the predictive ability of a simple AR model. However, they do help to predict EU aggregates. Furthermore, forecasts from pooling individual country models usually outperform those of the aggregate itself, particularly for the EU25 grouping. This is particularly interesting from the perspective of the European Central Bank, who require forecasts of economic activity and inflation to formulate appropriate economic policy across the enlarged group. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Thomas Flavin & Ekaterini Panopoulou & Theologos Pantelidis, 2009. "Forecasting growth and inflation in an enlarged euro area," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(5), pages 405-425.
  • Handle: RePEc:jof:jforec:v:28:y:2009:i:5:p:405-425 DOI: 10.1002/for.1117

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