Danish central bank urges use of payments data in forecasts
Data provides good forecasts during normal times, but deteriorates in stressed conditions
Research from the National Bank of Denmark says central banks should “seriously consider” including payments data in their forecasting toolkits.
This is despite the risks model performance may deteriorate during times of economic crisis, the authors say.
In their paper, Kristian Nørgaard Bentsen and Denis Gorea find payments data delivers “some of the best” nowcasts and short-term forecasts of GDP.
“These timely sources of information seem to be reliable predictors of economic activity in
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