Estimating quarter to quarter economic growth in Kosovo

Abstract

Estimation of economic growth in real time is one of the main objectives for most of the policymakers. At this point Gross Domestic Production at quarterly frequencies is the most accurate indicator. Most of the countries that have developed this macroeconomic indicator are publishing GDP in two main forms, seasonal and not seasonal adjusted. Seasonality is a present phenomenon for most of the economic sectors at quarterly frequencies. These different rhythms caused by weather, human habits, legislation, and so on, tend to repeat themselves periodically. It is therefore natural to try to estimate their impact and take account of them in the analysis of quarterly time series. Seasonal adjustment serves to facilitate the comparisons between periods especially in the linked periods. These adjustments tried to avoid phenomena like the increase of employment in agriculture or accommodation sector during summer because of production cycle and the increase number of tourists. In this paper it will be presented a method how to do seasonal adjustment on quarterly GDP by production approach in case of Kosovo. The paper details an application of Tramo and Seats method using, to seasonal adjustment and trend-cycle estimation. Based on sector analyses will be discussed the important problem of the choice between direct and indirect adjustment of quarterly series.