Konstantīns Beņkovskis (Monetary Policy Department, Bank of Latvia)

Abstract: This paper presents a method of estimating the current state of Latvia’s economy. The evaluation object is medium to long-run growth of real GDP, but not actual GDP itself, which helps to filter out various one-off effects and focus on medium and long-run tendencies. Our indicator, called LATCOIN (Latvia’s Business Cycle Coincidence Indicator), could be viewed as a simple adaptation of new EUROCOIN for Latvia with some changes in methodology. LATCOIN is a monthly estimate of the medium to long-run growth of Latvia’s real GDP, which is produced on the 9th working day of the next month. Using a large panel of macroeconomic variables, a few smooth unobservable factors describing the economy are constructed. Further, these factors are used for the estimation of LATCOIN.

Keywords: Latvia's real GDP, band-pass filter, coincidence indicator, generalised principal components, real-time performance

JEL classification: C22, C50, E32