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Forecasting Turkish GDP Growth : Bottom-Up vs Direct?

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  • Mahmut Gunay

Abstract

[EN] In this note, we compare performance of direct and bottom-up approaches to forecasting Turkish GDP growth. In the bottom-up approach, we forecast each component separately and then aggregate these forecasts to reach GDP growth forecast. In the direct approach, we model and forecast GDP growth itself. Results indicate that bottom-up approach helps reduce forecast errors. Importance of the bottom-up approach becomes more evident when we take into account the storytelling dimension of forecasting. [TR] Bu calismada, milli gelir tahmini icin dogrudan ve dolayli yaklasimlarin performanslari karsilastirilmaktadir. Dolayli yaklasimda milli gelirin alt kalemleri ayri ayri tahmin edilip, bu tahminlerin birlestirilmesiyle milli gelir buyume tahmini olusturulmaktadir. Dogrudan yaklasimda ise milli gelir buyumesinin kendisi modellenmekte ve tahmin edilmektedir. Sonuclar, dolayli yaklasimin tahmin hatalarini azalttigini gostermektedir. Tahminlerin salt rakam sunmaktan ziyade iktisadi bir oyku anlatmak icin de kullanildigi dikkate alindiginda, daha kapsamli analiz yapmaya imkan veren dolayli yaklasimin onemi belirginlesmektedir.

Suggested Citation

  • Mahmut Gunay, 2016. "Forecasting Turkish GDP Growth : Bottom-Up vs Direct?," CBT Research Notes in Economics 1622, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:econot:1622
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    References listed on IDEAS

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    1. Kirstin Hubrich & David F. Hendry, 2005. "Forecasting Aggregates by Disaggregates," Computing in Economics and Finance 2005 270, Society for Computational Economics.
    2. António Rua & Paulo Esteves, 2012. "Short-term forecasting for the portuguese economy: a methodological overview," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    3. Katja Heinisch & Rolf Scheufele, 2018. "Bottom-up or direct? Forecasting German GDP in a data-rich environment," Empirical Economics, Springer, vol. 54(2), pages 705-745, March.
    4. repec:zbw:iwhdps:7-13 is not listed on IDEAS
    5. James H. Stock & Mark W.Watson, 2003. "Forecasting Output and Inflation: The Role of Asset Prices," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 788-829, September.
    6. Hahn, Elke & Skudelny, Frauke, 2008. "Early estimates of euro area real GDP growth: a bottom up approach from the production side," Working Paper Series 975, European Central Bank.
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