New method predicts GDP components for better economic forecasting.
The article discusses a new method to estimate the smoothed component of GDP growth rates for different economic factors like consumption, investment, exports, and imports in the Euro Area. By using the Eurocoin indicator and a dynamic factor model, researchers found that it can be challenging to determine whether national or European variables are more useful for predicting Expenditure Components. The study suggests testing various strategies to improve accuracy in forecasting economic growth components.