Forecasting world output: the rising importance of emerging economies

Alessandro Borin (), Riccardo Cristadoro, Roberto Golinelli and Giuseppe Parigi
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Alessandro Borin: Bank of Italy

No 853, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Assessing the global economic outlook is a fundamentally important task of international financial institutions, governments and central banks. In this paper we focus on the consequences of the rapid growth of emerging markets for monitoring and forecasting the global outlook. Our main results are that (i) the rise of the emerging countries has sharply altered the correlation of growth rates among the main economic areas; (ii) this is clearly detectable in forecasting equations as a structural break occurring in the 1990s; (iii) hence, inferences on global developments based solely on the industrialized countries are highly unreliable; (iv) the otherwise cumbersome task of monitoring many � and less studied � countries can be tackled by resorting to very simple bridge models (BM); (v) BM performance is in line with that of the most widely quoted predictions (WEO, Consensus) both before and during the recent crisis; (vi) for some emerging economies, BMs would have provided even better forecasts during the recent crisis.

Keywords: GDP forecast; emerging and Asian markets; bridge models; forecasting ability (search for similar items in EconPapers)
JEL-codes: C22 C53 E37 F47 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-cwa and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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