A Financial Conditions Index For Poland

Download or read book A Financial Conditions Index for Poland written by Giang Ho and published by International Monetary Fund. This book was released on 2013-12-19 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper constructs a financial conditions index for Poland to explore the link between financial conditions and real economic activity. The index in constructed by applying two complementary approaches—factor analysis and vector auto-regression approach. We evaluate the index’s forecasting performance against a composite leading indicator developed by the OECD. We found that the FCI is highly correlated with GDP growth, attesting to the importance of financial sector in Poland’s economy. In-sample and out-of-sample forecasting exercises indicate that the FCI can outperform the CLI in predicting near-term GDP growth.