New Indicators For Tracking Growth In Real Time
The authors develop monthly indicators for tracking growth in 32 advanced and emerging-market economies. They test the historical performance of the indicators and find that they do a good job at describing the business cycle. In a recursive out-of-sample forecasting exercise, they find that the indicators generally produce good GDP growth forecasts relative to a range of time series models. Evaluating the current state of the business cycle is of crucial importance to policy makers and the general public alike. However, economic data are often noisy and available with a substantial lag.