EEU Policy Brief #3

Authors Matthew Gordon and Ivan Mendieta-Muñoz have put together a research brief on Nowcasting Regional GDP in Utah
Using Dynamic Factor Models.

Key findings include:

• Dynamic factor models can be used to obtain nowcasts for Utah’s GDP using either expectation-maximization
  or two-stage principal components methods, thus providing a real-time read on the heartbeat of Utah’s Economy.
• Nowcasting Utah’s GDP should be carried out using the two-stage principal components method.
  The models constructed using this method show moderate to large improvements in forecasting
  accuracy (11% to 28%) compared to other benchmark models, and can accurately track the peaks and
  troughs of Utah’s GDP as more observations become available.

Read the full policy brief:  Nowcasting Regional GDP in Utah Using Dynamic Factor Models