Banco Central de Reserva del Perú Banco Central de Reserva del Perú Investigación Económica y Financiera
ES

Development of a Regional Economic Activity Indicator and Gross Value Added Forecasts: The Case of Loreto

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December 2022

Language: Spanish

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Development of a Regional Economic Activity Indicator and Gross Value Added Forecasts: The Case of Loreto

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Keywords

  • Bayesian dynamic factor
  • economic activity
  • Gross Value Added
  • projection
  • RECM

Abstract

By employing a Bayesian dynamic factor model and using economic time series with mixed frequencies, we obtain a tool for the latent, unobserved quarterly estimation of economic activity in Loreto. Furthermore, this allows us to generate forecasts in advance of the official publication of the region’s annual Gross Value Added. The results show that the economic activity indicator is consistent with regional and national economic trends. Furthermore, the forecasts for Loreto’s Gross Value Added demonstrate a high level of accuracy, as they deviate on average by 1.5% (as measured by the root of the mean square error—RMSE) from the actual data.