Guiding through uncertainty: nowcasting the GDP of Croatia
This paper addresses the creation of a nowcasting model for economic activity in Croatia. While considering the characteristics of a small, open economy incorporated in a larger economic unit, it emphasises, alongside domestic hard and soft indicators, the importance of using foreign indicators of s...
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| Format: | Article |
| Language: | English |
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Institute of Public Finance
2025-01-01
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| Series: | Public Sector Economics |
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| Online Access: | https://hrcak.srce.hr/file/479889 |
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| _version_ | 1850225629035757568 |
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| author | Mateo Ljubišić |
| author_facet | Mateo Ljubišić |
| author_sort | Mateo Ljubišić |
| collection | DOAJ |
| description | This paper addresses the creation of a nowcasting model for economic activity in Croatia. While considering the characteristics of a small, open economy incorporated in a larger economic unit, it emphasises, alongside domestic hard and soft indicators, the importance of using foreign indicators of short-term movements. By comparing factor models, including both the static method of principal components and dynamic methods of quasi-maximum likelihood and two-step estimation approaches, the paper aims to identify a model that accurately describes short-term GDP movements. The results indicate that structural factor extraction from two or three clusters of indicators combined with the simple method of principal components yields the best results. Such timely insights are crucial for decision-making at all levels, especially for fiscal policymakers in a recent entrant to the monetary union. |
| format | Article |
| id | doaj-art-be7e990a7fff45478781dc877844985e |
| institution | OA Journals |
| issn | 2459-8860 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Institute of Public Finance |
| record_format | Article |
| series | Public Sector Economics |
| spelling | doaj-art-be7e990a7fff45478781dc877844985e2025-08-20T02:05:18ZengInstitute of Public FinancePublic Sector Economics2459-88602025-01-0149218521110.3326/pse.49.2.1Guiding through uncertainty: nowcasting the GDP of CroatiaMateo Ljubišić0Croatian National Bank, Zagreb, CroatiaThis paper addresses the creation of a nowcasting model for economic activity in Croatia. While considering the characteristics of a small, open economy incorporated in a larger economic unit, it emphasises, alongside domestic hard and soft indicators, the importance of using foreign indicators of short-term movements. By comparing factor models, including both the static method of principal components and dynamic methods of quasi-maximum likelihood and two-step estimation approaches, the paper aims to identify a model that accurately describes short-term GDP movements. The results indicate that structural factor extraction from two or three clusters of indicators combined with the simple method of principal components yields the best results. Such timely insights are crucial for decision-making at all levels, especially for fiscal policymakers in a recent entrant to the monetary union.https://hrcak.srce.hr/file/479889nowcastinggdpfactor extractiontimely information,decision-makingcroatia |
| spellingShingle | Mateo Ljubišić Guiding through uncertainty: nowcasting the GDP of Croatia Public Sector Economics nowcasting gdp factor extraction timely information,decision-making croatia |
| title | Guiding through uncertainty: nowcasting the GDP of Croatia |
| title_full | Guiding through uncertainty: nowcasting the GDP of Croatia |
| title_fullStr | Guiding through uncertainty: nowcasting the GDP of Croatia |
| title_full_unstemmed | Guiding through uncertainty: nowcasting the GDP of Croatia |
| title_short | Guiding through uncertainty: nowcasting the GDP of Croatia |
| title_sort | guiding through uncertainty nowcasting the gdp of croatia |
| topic | nowcasting gdp factor extraction timely information,decision-making croatia |
| url | https://hrcak.srce.hr/file/479889 |
| work_keys_str_mv | AT mateoljubisic guidingthroughuncertaintynowcastingthegdpofcroatia |