Author(s): Shane Lowe and Tiffany Grosvenor
Indicators of economic activity provide key inputs into policymakers’, business persons’, investors’ and consumers’ decision making processes. However, the Eastern Caribbean Central Bank (ECCB) currently only publishes annual gross domestic product (GDP) series for each of the 8 member states on which it reports, with quarterly reports providing qualitative guidance as to the general direction of economic activity. This study applies the technique of Chow and Lin (1971) to related, high-frequency macroeconomic variables in an attempt to produce quarterly estimates of economic activity for each member of the Eastern Caribbean Currency Union (ECCU) over the period 1993 to 2014. The results indicated that changes in our quarterly GDP estimates generally track the ECCB’s approximations regarding the direction of economic activity for most economies and at least match estimates from a univariate model for seven of the eight countries.