A Forecasting Econometric Model for Regional GDP

This study advances an empirically tested macroeconomic model developed for regional economies of Italy. Firstly, it is briefly recalled the reference literature in the field of regional forecasting modeling. Subsequently, we mark the utility, for a local government, to have forecasting instrument built just on peculiarity of its territory. One of the key features of the model is the joint representation of the economy on both the demand and the supply sides with a system of multiple regional estimation equations. Another relevant feature of the model is its public financial section, developed in detail both for revenues and taxes. After documenting the estimation outcomes with an in-sample simulation, we show some response functions of the model to a positive shock on public expenditure.