Quarterly Regional GDP Flash Estimates by Means of Benchmarking and Chain Linking

Abstract

In this article we propose a methodology for estimating the GDP of a country's different regions, providing quarterly profiles for the annual official observed data. Thus the article offers a new instrument for short-term monitoring that allows the analysts to quantify the degree of synchronicity among regional business cycles. Technically, we combine time-series models with benchmarking methods to process short-term quarterly indicators and to estimate quarterly regional GDPs ensuring their temporal and transversal consistency with the National Accounts data. The methodology addresses the issue of nonadditivity, explicitly taking into account the transversal constraints imposed by the chain-linked volume indexes used by the National Accounts, and provides an efficient combination of structural as well as short-term information. The methodology is illustrated by an application to the Spanish economy, providing real-time quarterly GDP estimates, that is, with a minimum compilation delay with respect to the national quarterly GDP. The estimated quarterly data are used to assess the existence of cycles shared among the Spanish regions.

Regional output growth in the United Kingdom: More timely and higher frequency estimates from 1970

“…Following Cuevas et al (), we also add quarterly regional indicator data into the model. Relevant regional data going back to 1966 are difficult to find.…”

“…As the UK is a small open economy, in the tradition of Sims (1992), we augment the VAR with four quarterly macroeconomic variables for the UK: inflation, interest rates (the bank rate), the exchange rate and the oil price. 16 Following Cuevas et al (2015), we also add quarterly regional indicator data into the model. Relevant regional data going back to 1966 are difficult to find.…”

“…Di Fonzo provides a least squares estimator for missing data subject to both temporal and cross‐sectional constraints. Cuevas, Quilis, and Espasa () develop a variant of this matrix‐based approach, which does not rely on Kalman filtering, to produce higher frequency estimates of regional (chain‐linked) GDP in Spain.…”

Temporal disaggregation of economic time series: The view from the trenches

“…The evolution of temporal disaggregation since the 1980s is clearly related to its multivariate extension, including the incorporation of richer transversal constraints; see the works of Rossi (), Di Fonzo (, ), Guerrero and Nieto (), Di Fonzo and Marini (, ), and Proietti (), among others. This extension deserves a specific research, and it is beyond the limits of this paper because the combination of transversal and temporal constraints must be handled carefully, depending on the specific problem at hand; see the works of Proietti (); Mushkudiani (); Bikker, Daalmans, and Mushkudiani (); Chen (); and Cuevas, Quilis, and Espasa () for different applications and the work of Quilis () for a software implementation of these methods (Rossi, Di Fonzo, and multivariate Denton), as well as purely transversal methods, for example, the works of Van der Ploeg (, ).…”

Twenty-Two Years of Inflation Assessment and Forecasting Experience at the Bulletin of EU & US Inflation and Macroeconomic Analysis

“…The quarterly forecasts of the GDPs of the 17 Spanish Regions were formalized in Cuevas et al (2015), who propose a forecasting method in which the GDP variables are disaggregated in the different official production sectors. The procedure interpolates the annual data at a quarterly level using leading indicators and builds econometric dynamic models to forecast all the quarterly production components of all GDPs of the Spanish regions; from them, corresponding regional initial GDP forecasts are obtained.…”