Forcasting Growth and Inflation in an Enlarged Euro Area

Flavin, Thomas and Panopoulou, Dr Ekaterini and Pantelidis, Dr Theologos (2008) Forcasting Growth and Inflation in an Enlarged Euro Area. UNSPECIFIED. (Unpublished)

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We compare models for forecasting growth and inflation in the enlarged euro area. Forecasts are built from univariate autoregressive and single equation models. 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 can 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.

Item Type: Other
Keywords: Forecasting; Financial variables; Growth; Inflation; Aggregation
Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
Item ID: 1038
Depositing User: Thomas Flavin
Date Deposited: 26 Aug 2008
Refereed: No

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