March 2021

Back to the Present: Learning about the Euro Area through a Now-casting Model

Danilo Cascaldi-Garcia, Thiago RT Ferreira, Domenico Giannone, Michele Modugno


We build a model for simultaneously now-casting economic conditions in the euro area and its three largest member countries|Germany, France, and Italy. The model formalizes how market participants and policymakers monitor the euro area by incorporating all market moving indicators in real time. We find that area wide and country-specific data provide informative signals to now-cast the economic conditions in the euro area and member countries. The model provides accurate predictions of economic conditions in real time over a period that covers the past three recessions.

This paper was reposted April 2, 2021, with the following changes: In Figure 1, bars decomposing the nowcasted euro-area GDP growth across its main countries have been added, and an associated sentence on page 2 has been revised to reflect this.

Keywords: Now-casting, euro area, dynamic factor models


PDF: Full Paper

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Last Update: April 02, 2021