Exploring Nowcasting Techniques for Real-Time GDP Estimation in Bhutan

In various policy institutions, current estimates of quarterly GDP growth are frequently employed to advise decision makers on the current state of the economy. The bridge equation serves as a fundamental model for nowcasting, elucidating GDP growth through the utilization of time-aggregated business cycle indicators. Recent academic literature has shown significant interest in an alternative method for nowcasting known as mixed-data sampling, abbreviated as MIDAS. Given this context, the paper examines the following questions: How can we estimate the annual GDP of Bhutan through MIDAS and bridge equations? Do they matter for nowcasting GDP growth in practice? By addressing these questions, the study aims to to provide insights into the application and comparative efficacy of these nowcasting techniques in an empirical context.