LATCOIN: Determining Medium to Long-Run Tendencies of Economic Growth in Latvia in Real Time

Working Paper 1/2010

Abstract
This paper presents a method of estimating the current state of Latvia's economy. The evaluation object is medium to long-run growth of real GDP, but not actual GDP itself, which helps to filter out various one-off effects and focus on medium and long-run tendencies. Our indicator, called LATCOIN (Latvia's Business Cycle Coincidence Indicator), could be viewed as a simple adaptation of EUROCOIN for Latvia with some changes in methodology. LATCOIN is a monthly estimate of the medium to long-run growth of Latvia's real GDP, which is produced on the 9th working day of the next month. Using a large panel of macroeconomic variables, few smooth unobservable factors describing the economy are constructed. Further, these factors are used for the estimation of LATCOIN.

Keywords: Latvia's real GDP, band-pass filter, coincidence indicator, generalised principal components, real-time performance, turning points

JEL classification codes: C22, C50, E32

Research published: LATCOIN: determining medium to long-run tendencies of economic growth in Latvia in real time. Baltic Journal of Economics, vol.10, No.2, Autumn 2010, pp.27-48 Available: http://www.biceps.org/en/LatcoinDeterminingMedium