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Leading Indicators of Growth and Inflation in Turkey

28 Pages Posted: 15 Feb 2006  

Daniel Leigh

Johns Hopkins University

Marco Rossi

International Monetary Fund (IMF)

Date Written: December 2002


Growth and inflation in Turkey have been volatile over the last two decades. It would, therefore, be useful to identify indicators that anticipate economic conditions and inflation. This paper investigates the predictive performance of economic indicators for inflation and real output growth in Turkey. We find that (i) the forecasting ability of individual indicators is unstable; but that (ii) a suitable combination of these unstable forecasts yields a forecast that reliably outperforms that generated by an autoregressive model. We then propose a two-stage combination forecast obtained by taking the median of the top five performing individual forecasts. This two-stage forecast reliably improves on autoregressive benchmarks and outperforms the combination forecast based on all the individual forecasts.

Keywords: Growth inflation combination forecasts leading indicators inflation targeting Turkey

JEL Classification: E31 E32 E37 E58 F43 O52

Suggested Citation

Leigh, Daniel and Rossi, Marco, Leading Indicators of Growth and Inflation in Turkey (December 2002). IMF Working Paper, Vol. , pp. 1-28, 2002. Available at SSRN:

Daniel Leigh (Contact Author)

Johns Hopkins University

Baltimore, MD 21218
United States

Marco Rossi

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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