The small open hypothesis suggests that small open economies are crucially affected by foreign economic activity. This study compares the predictive content of traditional financial variables and foreign economic activity for forecasting GDP growth in seven European small open economies during...

Purpose This paper examines the predictive content of financial variables above and beyond past GDP growth in a small open economy in the Eurozone. We aim to clarify potential differences in forecasting economic activity during periods of steady growth and economic turbulence....