INTEGRATING MONEY INTO REGIONAL MODELS OF LEADING INDICATORS

Paul Kozlowski
unpublished
Given the role of monetary changes in explaining business cycles, a challenge for regional analysts is to integrate monetary processes into leading indicator models. This paper examines economic processes imbedded in regional models and analyzes changes in forecasting performance when a national monetary indicator is integrated into these models. Performance of the models, with and without the monetary variable, is examined with respect to turning points, volatility, false signals, and
more » ... ive forecasts. The results show that integrating a national monetary indicator into the regional models of leading indicators is conceptually sound as well as empirically promising, and may contribute to the information content imbedded in this class of models.
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