BoI paper presents new method for eurozone inflation forecasts

Map of Europe in CRN blue

A working paper published by the Bank of Italy presents a model using data from the eurozone’s four largest economies to predict the bloc’s inflation. 

In Forecasting inflation in the euro area: countries matter!, Angela Capolongo and Claudia Pacella present a Bayesian vector autoregressive model with three layers of information.

The first of these are variables they describe as “key drivers of inflation” in the four biggest eurozone economies: France, Germany, Italy and Spain. They then look

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