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This paper examines the design of economic policies using factor analysis, which has several advantages; in particular, it limits the problems that typically arise from the high correlation of economic policy indicators, it helps in identifying clusters of economic policy, and it facilitates the derivation of policy design indicators that represent the pace and sequence of economic policies. Econometric results show that the introduction of sound economic policies has both level effects and growth effects, suggesting it is necessary to exercise caution when assessing a country's growth prospects immediately following the introduction of new policies. In addition, the results suggest that growth strengthens when a country implements policies that outpace either a notional measure of "world average policies" or a country's own policy trend, and highlight the critical role played by macroeconomic vis-à-vis microeconomic policies. The latter also reveals the existence of sequencing factors in policy implementation; for example, trade liberalization and financial liberalization positively affect growth, but more so if economic stability and fiscal sustainability have been secured.

Econometrics --- Macroeconomics --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Fiscal Policy --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Institutions and the Macroeconomy --- Econometrics & economic statistics --- Factor models --- Fiscal stabilization --- Fiscal sustainability --- Structural reforms --- Fiscal stance --- Fiscal policy --- Econometric models --- Zimbabwe

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The analysis of inflation developments in Belarus is hampered by widespread price controls. Persistence of common inflation is generally higher than that of actual inflation. Factor analysis assumes that covariation among time series can be explained by a few unobserved shocks (factors). The dependent variable in our estimations is growth in real GDP per capita in purchasing power parity (PPP) terms, while the explanatory variable of interest is the annual rate of change in the terms of trade.

Econometrics --- Exports and Imports --- Inflation --- Macroeconomics --- Empirical Studies of Trade --- Price Level --- Deflation --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- International economics --- Econometrics & economic statistics --- Terms of trade --- Consumer price indexes --- Price controls --- Factor models --- International trade --- Prices --- Econometric analysis --- Economic policy --- nternational cooperation --- Price indexes --- Government policy --- Econometric models --- Belarus, Republic of --- Nternational cooperation

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We develop a framework to nowcast (and forecast) economic variables with machine learning techniques. We explain how machine learning methods can address common shortcomings of traditional OLS-based models and use several machine learning models to predict real output growth with lower forecast errors than traditional models. By combining multiple machine learning models into ensembles, we lower forecast errors even further. We also identify measures of variable importance to help improve the transparency of machine learning-based forecasts. Applying the framework to Turkey reduces forecast errors by at least 30 percent relative to traditional models. The framework also better predicts economic volatility, suggesting that machine learning techniques could be an important part of the macro forecasting toolkit of many countries.

Turkey --- Econometrics --- Forecasting --- Intelligence (AI) & Semantics --- Forecasting and Other Model Applications --- Neural Networks and Related Topics --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Technological Change: Choices and Consequences --- Diffusion Processes --- Econometrics & economic statistics --- Machine learning --- Economic Forecasting --- Factor models --- Economic forecasting --- Econometric analysis --- Technology --- Econometric models

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This paper explores inflation determinants within the EU and implications for new members' euro adoption plans. Factor analysis partitions observed inflation in EU25 countries into common-origin and country-specific (idiosyncratic) components. Cross-country differences in common-origin inflation within the EU are found to depend on gaps in the initial price level, changes in the nominal effective exchange rate, the quality of institutions, and the economy's flexibility. Idiosyncratic inflation is generally small in magnitude. Nonetheless, the results show that country-specific shocks have systematically pushed down headline inflation, potentially influencing the assessment of compliance with the Maastricht inflation criterion.

Inflation (Finance) --- Finance --- Natural rate of unemployment --- Econometrics --- Foreign Exchange --- Inflation --- Labor --- Public Finance --- Price Level --- Deflation --- Demand and Supply of Labor: General --- Taxation, Subsidies, and Revenue: General --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Macroeconomics --- Currency --- Foreign exchange --- Labour --- income economics --- Public finance & taxation --- Econometrics & economic statistics --- Nominal effective exchange rate --- Labor market flexibility --- Legal support in revenue administration --- Factor models --- Prices --- Labor market --- Revenue --- Econometric models --- Czech Republic --- Income economics

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This paper develops an aggregation procedure using time-varying weights for constructing the common component of international economic fluctuations. The methodology for deriving time-varying weights is based on some stylized features of the data documented in the paper. The model allows for a unified treatment of cyclical and seasonal fluctuations and also captures the dynamic propagation of shocks across countries. Correlations of individual country fluctuations with the common component provide evidence of a “world business cycle” and a distinct European common component. The results suggest that macroeconomic fluctuations have become more closely linked across industrial economies in the post–Bretton Woods period.

Econometrics --- Macroeconomics --- Industries: General --- Business Fluctuations --- Cycles --- Model Construction and Estimation --- Prices, Business Fluctuations, and Cycles: Forecasting and Simulation --- Macroeconomics: Production --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Industrial Organization: General --- Economic growth --- Econometrics & economic statistics --- Industrial production --- Production growth --- Business cycles --- Factor models --- Industrial sector --- Production --- Econometric analysis --- Economic sectors --- Industries --- Economic theory --- Econometric models --- United States