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Simulation smoothing for nowcasting with large mixed-frequency VARs

Sebastian Ankargren, Paulina Jonéus

arXiv 1 Jul 2019 · Econometrics · publishedEconometrics and Statistics (2020) · 4 citations (OpenAlex)

arXiv:1907.01075 · PDF · DOI · OpenAlex · Extracted main text

Abstract

There is currently an increasing interest in large vector autoregressive (VAR) models. VARs are popular tools for macroeconomic forecasting and use of larger models has been demonstrated to often improve the forecasting ability compared to more traditional small-scale models. Mixed-frequency VARs deal with data sampled at different frequencies while remaining within the realms of VARs. Estimation of mixed-frequency VARs makes use of simulation smoothing, but using the standard procedure these models quickly become prohibitive in nowcasting situations as the size of the model grows. We propose two algorithms that alleviate the computational efficiency of the simulation smoothing algorithm. Our preferred choice is an adaptive algorithm, which augments the state vector as necessary to sample also monthly variables that are missing at the end of the sample. For large VARs, we find considerable improvements in speed using our adaptive algorithm. The algorithm therefore provides a crucial building block for bringing the mixed-frequency VARs to the high-dimensional regime.

Citation extraction

31
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Carriero, A., Clark, T. E., and Marcellino, M (2019) Large Vector Autoregressions with Stochastic Volatility and Non-Conjugate Priors1.00053100%
2Götz, T. B. and Hauzenberger, K (2018) Large Mixed-Frequency VARs with a Parsimonious Time-Varying Parameter Structure1.00053100%
3Schorfheide, F. and Song, D (2015) Real-Time Forecasting with a Mixed-Frequency VAR0.98829697%
4Bańbura, M., Giannone, D., and Reichlin, L (2010) Large Bayesian Vector Auto Regressions0.92843100%
5Ankargren, S., Unosson, M., and Yang, Y (2018) A Mixed-Frequency Bayesian Vector Autoregression with a Steady-State Prior self0.64422100%
6Carter, C. K. and Kohn, R (1994) On Gibbs Sampling for State Space Models0.64422100%
7Cimadomo, J. and D'Agostino, A (2016) Combining Time Variation and Mixed Frequencies: An Analysis of Government Spending Multipliers in Italy0.64422100%
8McCracken, M. W. and Ng, S (2016) FRED-MD: A Monthly Database for Macroeconomic Research0.64422100%
9Qian, H (2016) A computationally efficient method for vector autoregression with mixed frequency data0.64422100%
10Eraker, B., Chiu, C. W., Foerster, A. T., Kim, T. B., and Seoane, H. D (2015) Bayesian Mixed Frequency VARs0.51121100%

Showing the top 10 of 31 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Nowcasting using regression on signatures0.40511
2Monthly GDP Growth Estimates for the U.S. States0.00011